Are Tradelines Legal? The Truth About the Gray Area That Could Land You in Federal Prison

By Joeziel Vazquez, CEO & Board Certified Credit Consultant (BCCC, CCSC, CCRS, FCRA Certified Professional)

17 Years Experience | Published: Oct 6, 2023 | Last Updated: November 7, 2025

Reading Time: 18 minutes

The Bottom Line You Need to Know

Here's what I'm going to tell you straight: Authorized user tradelines themselves are legal—protected by the Equal Credit Opportunity Act of 1974. But buying tradelines to artificially inflate your credit score so you can qualify for a mortgage, auto loan, or credit card you otherwise wouldn't qualify for? That enters a dangerous gray area that can quickly become federal bank fraud.

As someone who has been to federal prison (for addiction-related issues, not credit fraud), I know what those doors sound like when they close behind you. I know what it's like to watch your family leave after visiting hours. And I'm telling you from the bottom of my heart: no credit score is worth that experience.

The credit repair industry thrives on confusion about what's legal and what's not. Let me clear that up for you. Understanding federal credit laws and your rights is the first step to protecting yourself.

Understanding Tradelines: What Are We Actually Talking About?

Before we dive into legality, let's define our terms because this is where most confusion starts.

Definition 1: Any Account On Your Credit Report

In credit industry terminology, a "tradeline" simply means any account listed on your credit report. Your mortgage? That's a tradeline. Your auto loan? Tradeline. Every credit card you've ever opened? All tradelines.

This is standard industry jargon—nothing controversial here.

Definition 2: Authorized User Tradelines for Credit Enhancement

When people search "are tradelines legal," they're usually asking about the practice of purchasing authorized user status on someone else's credit card account. This is also called "piggybacking" or "buying tradelines."

Here's how it works: You pay a company (or individual) anywhere from $500 to $3,000 or more to be temporarily added as an authorized user on a stranger's credit card that has:

• A high credit limit (often $10,000-$50,000+)

• Perfect payment history (years of on-time payments)

• Low or zero balance (excellent utilization)

This account then appears on your credit report, potentially boosting your credit score significantly—sometimes 50-150 points.

This is the practice we're examining in this article, and this is where the gray area exists.

The Legal Foundation: Why Authorized Users Exist

The Equal Credit Opportunity Act (ECOA) of 1974

Authorized user accounts are legal because of federal legislation designed to prevent discrimination in lending. Here's the history you need to understand:

The Original Problem

In the 1970s, married women faced systemic credit discrimination. Banks routinely:

• Denied women credit applications outright

• Required women to have male co-signers

• Issued credit cards only in husbands' names

• Ignored women's authorized user accounts when evaluating creditworthiness

Even when women were authorized users on family credit cards, lenders frequently disregarded this credit history. This created a vicious cycle where women couldn't build independent credit, which justified denying them credit, which prevented them from building credit.

The Legislative Solution

Congress passed the Equal Credit Opportunity Act in 1974 to stop this discrimination. The law, particularly Regulation B, mandated that creditors must consider all authorized user accounts when evaluating credit applications—regardless of marital status or relationship to the primary cardholder.

The Unintended Consequence

Here's where things get interesting and complicated.

Because credit reporting agencies and financial institutions generally don't distinguish between spousal and non-spousal authorized users in their data systems, the law effectively requires that all authorized user accounts be treated equally in credit scoring.

This means credit bureaus cannot legally discriminate based on whether you're a spouse, family member, friend, or complete stranger. The Equal Credit Opportunity Act protects the practice.

The result? A legal framework that allows anyone—related or not—to benefit from authorized user status.

Where It Gets Gray: The Intent Behind the Transaction

Now we arrive at the critical distinction that could mean the difference between legal credit building and federal prison.

Legitimate Authorized User Scenarios (100% Legal)

Parents adding their children: A father adds his 18-year-old daughter to his credit card to help her establish credit history before college. She has access to the card for emergencies. This is not only legal—banks actively promote this practice.

Spouses helping each other: A wife with excellent credit adds her husband as an authorized user while he rebuilds after a past bankruptcy. They share finances. Completely legal.

Close family or friends: An older sibling adds a younger sibling. A business partner adds another partner. These are relationship-based situations where there's genuine connection and often actual card access.

What makes these legal: The relationship is real, the cardholder voluntarily helps someone they know, and there's no commercial transaction designed specifically to manipulate credit scores for loan approval.

The Gray Area: Commercial Tradeline Sales

The commercial model: You pay a stranger $1,500 to add you as an authorized user on their credit card for 60-90 days. You never meet them. You never get access to the card. You can't make purchases. The sole purpose is to inflate your credit score temporarily.

Why this is problematic:

1. You're not actually an authorized user in the traditional sense—you have zero access to the account

2. The credit bureau is reporting information that misrepresents your actual creditworthiness

3. Credit scoring formulas (both FICO and VantageScore) are proprietary and secret—no one knows exactly how they calculate your score, so you're manipulating a system you don't fully understand

4. The companies facilitating these transactions are walking a legal tightrope that has gotten many shut down by the FTC

When It Becomes Federal Bank Fraud: The Line You Cannot Cross

Let me be absolutely clear about when buying tradelines crosses from a gray area into criminal territory.

18 U.S.C. § 1344: Federal Bank Fraud

This federal statute makes it a crime to knowingly execute a scheme to defraud a financial institution or to obtain money, property, or other assets through false pretenses.

Maximum penalties: 30 years in federal prison and up to $1,000,000 in fines.

The Criminal Scenario

Here's how purchasing tradelines becomes bank fraud:

Step 1: You have a 550 credit score. You cannot qualify for a mortgage at reasonable terms.

Step 2: You pay $2,000 to a tradeline company. They add you as an authorized user to three high-limit credit cards with perfect payment history.

Step 3: Your credit score jumps to 680-700.

Step 4: You apply for a $300,000 mortgage. You submit your credit report showing the 680 score. You don't disclose that:

• Your score is artificially inflated

• You paid strangers for these accounts

• You have zero access to these credit cards

• You'll be removed in 60-90 days

Step 5: The bank approves your loan based on creditworthiness you don't actually have.

That is bank fraud. You obtained credit through misrepresentation of your true financial situation.

"But the Lender Can See I'm an Authorized User"

This is the argument tradeline companies make, and it's dangerously misleading.

The fraud isn't about hiding that you're an authorized user. The fraud is about misrepresenting your actual creditworthiness to obtain a loan you wouldn't otherwise qualify for.

You're presenting yourself as someone with a 680 credit score and strong credit history when you actually have a 550 score that was temporarily boosted through a commercial transaction specifically designed to deceive lenders.

When Federal Prosecutors Get Involved

Here's what triggers criminal investigation:

You default on the loan. When you stop making payments, the lender investigates. They discover the purchased tradelines. They realize you obtained the loan through misrepresentation. They report it to federal investigators.

That's when your life changes forever.

The federal conviction rate is over 99%. When they decide to prosecute you, you're almost certainly going to be convicted. And unlike state charges where you might get probation, federal prosecutors stack charges and pursue prison time.

Real Federal Enforcement: The FTC Is Shutting Down Tradeline Companies

Let me tell you about three cases that happened in the last five years. Not rumors. Actual federal enforcement actions.

BoostMyScore (2020)

The Operation: William O. Airy and his company charged consumers $325 to $4,000+ to be added as authorized users on strangers' credit cards.

Their Marketing: Promised "the amazing benefit of having another person's credit copied and pasted onto your credit report" with guaranteed score increases of up to 120 points in under two weeks.

The FTC's Action: Sued for violations of the FTC Act, Credit Repair Organizations Act (CROA), and Telemarketing Sales Rule. According to the complaint, they coached people on how to conceal what was happening.

The Result: Business shut down. Airy barred from credit repair forever. Every customer left with purchased tradelines on their credit reports that could be discovered during any future loan application.

The Credit Game / Wholesale Tradelines (2022)

The Operation: Brought in over $15 million selling tradeline schemes. Purchased BoostMyScore's customer database after BoostMyScore had already been shut down by the FTC.

Their Practices: Filed bogus identity theft reports with the FTC, provided false information to credit bureaus, encouraged customers to dispute accurate information.

The FTC's Action: Charged with violations of the FTC Act, CROA, Business Opportunity Rule, Telemarketing Sales Rule, and the Covid Consumer Protection Act (they preyed on people during the pandemic).

The Result: Shut down and massive penalties.

Top Tradelines / Deletion Experts (2019)

The Operation: Charged $2,000-$3,000 for credit repair services and tradelines under multiple business names.

The FTC's Action: Shut down for deceptive marketing, false promises, illegal upfront fees, and failure to provide required CROA disclosures.

The Legal Theory: The FTC argued that if an authorized user doesn't have actual access to the card—which purchased tradelines don't—then untrue information is being reported to credit bureaus, violating CROA.

The Credit Repair Organizations Act (CROA): Why Many Tradeline Companies Operate Illegally

Even when tradeline sales themselves aren't explicitly illegal, companies selling them must comply with the Credit Repair Organizations Act (CROA) of 1996.

CROA Requirements

No upfront fees: Companies cannot charge before services are fully rendered. Any tradeline company requiring full payment weeks before tradelines post to your credit report violates CROA.

No false claims: Promises like "guaranteed 100-point increase" or specific score improvements are explicitly prohibited.

Required disclosures: Companies must provide written contracts detailing services, timeframes, cancellation rights, and consumer rights to dispute information independently.

Cannot waive consumer rights: You cannot be required to waive your right to sue or your other legal protections.

Why This Matters

Most tradeline companies violate CROA in multiple ways:

• Charging full payment upfront

• Making specific score increase guarantees

• Failing to provide proper disclosures

• Including anti-disparagement and anti-chargeback clauses that waive your rights

These violations make the companies themselves illegal operations, even if authorized user accounts are technically legal.

The Secret Formulas: Why You're Gambling With Your Future

Here's something tradeline companies don't tell you: Both FICO and VantageScore keep their exact scoring formulas proprietary and secret.

What We Know (The General Factors)

• Payment history: 35% of FICO score

• Amounts owed/utilization: 30%

• Length of credit history: 15%

• Credit mix: 10%

• New credit: 10%

What We Don't Know (The Critical Details)

• The exact mathematical formula for calculating your score

• How much weight authorized user accounts receive versus primary accounts

• How scoring models identify and potentially discount purchased tradelines

• What triggers manual reviews during mortgage underwriting

You're paying thousands of dollars to manipulate a proprietary algorithm you don't understand, hoping it works in your favor, and risking federal prosecution if you use the results to obtain credit.

That's not a smart financial decision. That's gambling with your freedom.

My Personal Warning: I Know What Prison Is Like

I need to tell you something that makes me qualified to give this warning.

I've been to federal prison. Multiple times. Not for credit fraud—for addiction-related issues that I battled for years. I've been in recovery since March 5, 2015. That's over 3,900 days clean as I write this.

I've never hidden this. When industry critics try to use my criminal record as a weapon against me—thinking they've found some devastating secret—they've actually proven why you should listen to me.

Because unlike the people selling CPNs and tradelines who've never faced consequences, I know exactly what federal prison is. I know what those doors sound like when they close behind you. I know what it's like to watch your family leave after visiting hours and not know when you'll hold them again as a free person. I know what time feels like when you can't just leave.

So when I tell you to stay away from schemes that could land you in federal prison, I'm not reading from a legal textbook. I'm telling you from lived experience.

Every manipulation tactic. Every justification for bad behavior. Every lie you tell yourself when you know you're doing something wrong but you're desperate enough to do it anyway. Every predator who sees vulnerability and moves in for the kill. I've seen it all, lived through it all, and survived it all.

And I'm telling you: Run from anyone offering you tradeline schemes promising to help you qualify for loans. Run fast. Run far.

Because I've been where you could end up, and it's somewhere you never want to be.

Read my full story and warnings about credit fraud schemes that lead to federal prison →

The "33% of Americans Are Authorized Users" Lie

Tradeline companies love to cite statistics: "About 33% of Americans with credit files have been authorized users at some point."

This is deliberate confusion of two completely different things.

Yes, 33% of Americans have been authorized users. You know who those people are?

• Teenagers added by their parents

• Spouses added by their partners

• Adult children helping elderly parents

• People in actual relationships with actual access to actual credit cards

That's not fraud. Nobody's going to prison for that.

But when you pay a stranger $1,500 to add you to their credit card for 60 days so you can artificially inflate your score to get a loan—that's different. That's a commercial transaction with the sole purpose of manipulating your credit score to deceive lenders.

The difference between legitimate authorized users and commercial tradeline schemes is the difference between your parent teaching you to drive in their car versus paying a stranger to take your driving test for you. One is help. One is fraud.

Should You Buy Tradelines? The Question You're Really Asking

Given everything we've covered, let me answer the question directly.

For General Credit Building

My answer: No. The risks outweigh any potential benefits:

Legal risk: You're operating in a gray area where federal enforcement is actively increasing

Financial risk: You're paying $500-$3,000+ for temporary score increases that disappear when you're removed

Credit risk: If the primary cardholder misses a payment while you're an authorized user, it damages your credit

Regulatory risk: The FTC has established that companies facilitating these transactions are operating illegally under CROA

For Mortgage or Auto Loan Approval

My answer: Absolutely not. This is bank fraud territory.

If you're considering buying tradelines specifically to qualify for a mortgage, auto loan, or credit card you wouldn't otherwise get approved for, you're crossing into criminal activity.

You're misrepresenting your creditworthiness to obtain credit through false pretenses. That's 18 U.S.C. § 1344—federal bank fraud—with penalties up to 30 years in prison and $1,000,000 in fines.

Don't do it. The temporary credit boost isn't worth federal prison time.

What Legitimate Credit Repair Actually Looks Like

I know what you're thinking: "My credit is destroyed. What am I supposed to do?"

That's a fair question. Let me tell you what actually works, what's completely legal, and what won't land you in federal court.

1. Get Your Free Credit Reports and Review Them Thoroughly

Visit AnnualCreditReport.com and pull your reports from all three bureaus. Look for:

• Accounts that aren't yours (identity theft)

• Incorrect balances or payment histories

• Duplicate accounts

• Accounts from ex-spouses that should be separate

• Information that's past the legal reporting period

Dispute genuine errors. Document everything. Follow up in writing. Under the Fair Credit Reporting Act (FCRA), you have the right to dispute inaccurate information, and credit bureaus must investigate.

2. Make Every Payment On Time From This Moment Forward

Your payment history is 35% of your credit score—the single biggest factor. Even if you can only afford minimum payments, pay them on time. Set up automatic payments. No exceptions.

Consistent on-time payments for 6-12 months will significantly improve your score.

3. Pay Down Credit Card Balances

Your credit utilization (how much of your available credit you're using) is 30% of your score.

Strategy:

• Get all credit cards below 70% utilization first

• Then work toward 30% utilization

• Ideal is below 10% utilization

Can't pay them all at once? Pay them down gradually. Pay more than the minimum. Consider paying twice per month to keep reported balances lower.

4. Consider a Secured Credit Card

Put down $200-$500 as a deposit. Use the card for small purchases and pay it off in full every month. After 6-12 months of perfect payments, most secured cards graduate to unsecured cards and you get your deposit back.

This builds real, sustainable credit history.

5. Become a Legitimate Authorized User

If you have family or close friends with excellent credit who genuinely want to help you, ask about authorized user status as part of a real relationship.

The difference: They actually know you, you might actually use the card with their permission, and there's no commercial transaction designed to deceive lenders.

6. Work With a Legitimate Credit Repair Company

Not all credit repair is illegal. Legitimate companies help you:

• Identify errors on your credit reports

• Draft proper dispute letters under FCRA guidelines

• Follow up with credit bureaus

• Navigate complex credit situations legally

At Credlocity, we've helped over 79,000 clients and deleted $3.8 million in unverified debt from credit reports—all legally and ethically.

Learn more about federal credit laws and your rights that protect consumers.

Why Choose Credlocity

17 Years of Experience: Founded in 2008, we've seen every credit situation imaginable

Board Certified: Our team holds BCCC, CCSC, CCRS, and FCRA Certified Professional credentials

Transparent Pricing: 30-day free trial, 100% money-back guarantee, no hidden fees

Comprehensive Support:

• Monthly one-on-one meetings with your credit consultant

• Monthly budgeting assistance included in all plans

• Mobile app access to track progress every step

• Real-time updates on disputes and deletions

Minority-Owned: Hispanic-owned, women-owned, LGBTQAI+-owned business serving underserved communities

Legal Compliance: We follow CROA, FCRA, and all federal credit regulations—no shortcuts, no schemes, no federal prison risk

We don't sell you tradelines. We don't promise specific score increases. We don't take shortcuts that put you at legal risk.

We do the work legally, ethically, and effectively.

If You've Already Made a Mistake: What To Do Now

Maybe you're reading this and your stomach just dropped. Maybe you already bought tradelines. Maybe you already used them to get a loan.

Step 1: Stop Immediately

Don't apply for any more credit using purchased tradelines. Don't use any CPNs you may have bought. Stop all activity that could be construed as fraud.

Step 2: Consult a Criminal Defense Attorney

Not a credit repair company. Not a financial advisor. A criminal defense attorney who handles federal cases.

Tell them everything. Attorney-client privilege protects your conversation. They can advise you on your actual legal exposure and next steps.

Step 3: Report the Company

Go to FTC.gov/complaint and report the company that sold you the tradelines or CPNs. This may help establish that you were a victim of their fraud, which could matter if charges ever arise.

Step 4: Document Everything

Save every email, receipt, text message, and piece of advertising. Document what they promised, what they claimed was legal, what they told you. If you face charges, you want to prove you were deceived.

Step 5: Fix Your Credit the Legal Way

Start making on-time payments. Dispute genuine errors. Build real, sustainable credit. Do it right this time.

The Verdict: Are Tradelines Legal?

Let me give you the complete, honest answer:

Authorized user accounts are legal—protected by the Equal Credit Opportunity Act.

Adding family members or friends as authorized users is legal and encouraged by banks.

Paying strangers to temporarily add you as an authorized user enters a gray area that the FTC is actively policing and shutting down.

Using purchased tradelines to misrepresent your creditworthiness and obtain loans you wouldn't otherwise qualify for is federal bank fraud—up to 30 years in prison.

The line between legal and illegal isn't always clear, but the consequences of crossing it are devastating.

Conclusion: What This All Comes Down To

Your credit score doesn't matter more than your freedom. Your credit score doesn't matter more than being there for your family. Your credit score doesn't matter more than sleeping peacefully at night knowing federal agents aren't going to show up at your door.

Fix your credit the right way. It takes longer. It's harder. It requires discipline and consistency.

But it's the only way that doesn't risk destroying your entire life.

And if you don't believe me—if you think I'm exaggerating—just remember: Every person sitting in federal prison for credit fraud thought "it won't happen to me" too.

Don't be next.

Get Help From Experts Who Do It Right

At Credlocity, we've been helping people rebuild their credit legally and ethically since 2008. We don't take shortcuts. We don't sell schemes. We don't put you at legal risk.

Start your 30-day free trial today and see what legitimate credit repair can accomplish.

📧 Ready to fix your credit the right way?

• 30-Day Free Trial

• 100% Money-Back Guarantee

• Monthly One-on-One Meetings

• App Access to Track Progress

• No Legal Risk, All Ethical Methods

Visit our sign-up page or email us at admin@credlocity.com to get started with a Board Certified Credit Consultant.

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Legal Disclaimers

This article is for educational purposes only and does not constitute legal advice. If you have questions about your specific situation or have already engaged in practices described in this article, consult immediately with a qualified criminal defense attorney.

Credit Repair Disclaimer: You have the right to dispute inaccurate information in your credit report yourself at no cost. Credlocity provides professional assistance with this process but cannot guarantee specific results or score increases. Learn more about your rights under federal credit laws.

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Sources and References

1. Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq.

2. Credit Repair Organizations Act (CROA), 15 U.S.C. § 1679 et seq.

3. Bank Fraud Statute, 18 U.S.C. § 1344

4. Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.

5. Federal Trade Commission v. BoostMyScore, Case No. 1:20-cv-00423 (D. Colo. 2020)

6. Federal Trade Commission v. The Credit Game, May 2022

7. Federal Trade Commission v. Top Tradelines, June 2019

8. Federal Reserve Board, "Credit Where None is Due? Authorized User Account Status and 'Piggybacking' Credit," 2010

9. Consumer Financial Protection Bureau, "What you should know about adding someone as an authorized user"

10. Department of Justice, Justice Manual § 826, Applicability of 18 U.S.C. § 1344

11. Loughrin v. United States, 573 U.S. 351 (2014)

12. Vazquez, Joeziel. "The Reality of Bad Credit and How to Avoid Being a Felon and Sentenced to Federal Prison." Credlocity, 2025.

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About the Author

Joeziel Vazquez is the CEO and Founder of Credlocity, established in 2008. He holds professional certifications including Board Certified Credit Consultant (BCCC), Certified Credit Score Consultant (CCSC), Certified Credit Repair Specialist (CCRS), and FCRA Certified Professional. With 17 years of experience, Joeziel has served over 79,000 clients and deleted $3.8 million in unverified debt from credit reports.

Joeziel is a nationally recognized credit repair and fintech expert, educator, and thought leader. He has contributed insights to major financial discussions, published articles on Medium, and provided commentary on consumer finance and regulatory issues. His expertise in federal credit laws and commitment to consumer protection makes him a trusted voice in the credit repair industry.

Connect with Joeziel on LinkedIn or email admin@credlocity.com for media inquiries to focus on ethical and effective strategies to build and maintain a good credit score. By taking a responsible approach to personal finance, you can improve your credit health without resorting to potentially risky practices.