Apparently it’s Easy to Manipulate Your Credit Score

I read an interesting article today that explained how a couple of dozen people were charged with credit card fraud after paying themselves about $200 Million. That itself isn’t too interesting, but the way in which the criminals perpetrated said fraud is interesting, at least to me. In order to get access to high credit limits that they eventually maxed out by paying themselves, the criminals actually started out by improving the credit scores of the people whose identities they stole.

No Amex cards in this stack means there are definitely credit limits on these cards!

No Amex cards means there are definitely credit limits on these cards!

According to the article, “Participants in the scam set up more than 1,800 mailing addresses, creating fake utility bills and other documents to provide credit card companies with what appeared to be legitimate addresses, investigators said. Once they obtained the cards, they started making small charges and paying off the cards to raise their credit limits, authorities said. They then sent fake reports to credit rating agencies, making it appear that cardholders had paid off debts, setting the stage for sterling credit ratings and high credit limits, investigators said.”

A couple of things stand out to me about this. First, credit-rating agencies can be easily fooled. Second, and most importantly, how significantly your credit score can be impacted by simply paying off your debts. The latter is worth discussing for those of us that have dozens of credit cards.

If you’ve been part of the loyalty point game for any amount of time, you’ll know that the only real barrier to entry is having a good credit score. If you happen to have credit card debt, it’s simply not wise to continue signing up for credit cards since it’s the most expensive debt you can have. Pay off all your debts ASAP!

For the rest of us, we know that obtaining and preserving a high credit score is an extremely high priority. It’s why we do credit card churns/app-o-ramas roughly every 91 days. It’s why we know not to apply for too much credit in the 6 months leading up to applying for a large loan (like a mortgage). It’s how we know that we should always keep our oldest credit card(s) open to have a longer average credit history length. And, of course, it’s how we know there are so many other ways to bump our score.

When I read this article, I thought it was an extremely visual reminder of how simple it is to improve your score. Even if you don’t bother with loyalty points, having a good credit score can lower how much you pay on your mortgage and car loans (which are generally the biggest ones), and other loans as well. As the article indicates, simply spending money on your cards and paying them back can help raise your score. The other way they mentioned was the impact of paying off debts, and while the article didn’t say it directly, I’d assume some of it was credit card debt. Note that having a mortgage won’t really hurt your score (and in fact it can help it), even though it’s technically debt.

Of course, we know that your credit score is like your personal report card. The better your score, the better your life will be…at least financially. Points-wise, having a good credit score will enable you to get approved for multiple cards at a time and, just as importantly these days, give you access to a higher credit line. A higher credit limit didn’t used to be that big of a deal before, but with all the prepaid/gift card opportunities available these days, having a $15K limit instead of a $5K limit might make a difference to people that stock up on Vanilla Reloads when they find them (like me). Add to that the fact that banks like Chase allow you to move around or “trade” credit from one card to another when signing up for a new one, and it suddenly becomes a big deal.

If you don’t have good credit or if you have lots of credit card debt, don’t play this game. Don’t sign up for credit cards unless you’re playing the 0% APR/balance transfer game, in which case I approve. To everyone else, have good credit!

Experts among us know there are a couple of ways to track your credit score. The two most popular free websites are and Yes, both are legit companies and I use both to monitor my score. While neither of them are perfect, the scores they show you should get you in the ballpark. For me personally Credit Karma shows a score that’s about 30 points lower than my actual score, while Credit Sesame is much more accurate. I’ve read that others say the opposite is true for them, so take the scores with a grain of salt. I prefer Credit Karma since their recent upgrade because now you can see a lot more detail about individual accounts.

Both are free!

Both are free!

If you want a much more accurate version, consider using American Express’s CreditSecure program. It gives you what should be a very accurate reading of your three credit scores, but you have to pay for them. The first 30 days are $1, and then it’s $15 a month after that. This program also gives you identity theft insurance and credit monitoring services that some might find useful, but I personally don’t. I signed up for the $1 version a few months back before I did a churn/app-o-rama, then cancelled just before my 30 day trial was up.

So the two takeaways: 1) don’t commit credit card fraud, even though it sounds easy enough to do, and 2) earn and maintain a good credit score.

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  1. Thanks for sharing this. I was a victim of identity theft once. Someone charged an $8,000 plane ticket to my credit card Luckily, the bank flagged it for fraud right away and called me. They cancelled the card and express-mailed me a new card in two days. I didn’t have to pay any charges. Still, I was a bit shaken.

    Ever since, I’ve been very interested in reading about computer hacking, fraud, etc. There’s a really great article in Wired magazine called “One Hacker’s Audacious Plan to Rule the Black Market in Stolen Credit Cards.” Features a hacker named Max Butler. That piece explains a lot about how these credit card scammers operate. The writer of that article expanded the story into a book titled, “Kingpin.”

    If you prefer video, there’s an episode of the TV show “American Greed” about the same hacker. Search on YouTube for “American Greed Max Butler,” and you’ll find it. They interview an FBI agent who says that you don’t actually have to be a computer genius to do credit card fraud. You can buy blank credit cards and card-encoding machines off Ebay. Instead of breaking into bank systems, you can buy stolen credit card numbers off other hackers in underground websites. He made it sound frighteningly easy to do.

    • Wow, thanks for sharing. It is a little crazy how easy it all sounds, though I really hope that’s not the case. Everyone I’ve spoken to that was a victim of cc fraud said that it was a relatively quick and simple process to get their money back, so at least the cc companies are doing their jobs!

  2. do you personally pay for creditsecure or think that the free sites are good enough? creditkarma is only transunion which in my case isn’t helpful since NJ area pulls experian.

    • I don’t pay for creditsecure on an ongoing basis – only when I’m really interested in my score. I paid for it once for the $1 trial but haven’t used it since, but I can see myself signing up for another month before a future churn just to make sure everything is in order.

      The combo of creditkarma and creditsesame should still provide you with good ballpark numbers if you’re not interested in paying.

      • my issue is that Credit secure is 730-740 and Karm/Sesame are both showing 20pts higher. Is that close enough in your opinion or are the offers you get for that range going to be the same anyways and these free ones would monitor suspicious activity well enough.

        • I think you’ll be completely fine with a 730-740 score. I think you’ll still be eligible to get all the cards you’d want (assuming nothing strange on your credit report), and if it goes to pending you can always call the reconsideration line. When you start doing your apps, just see what kind of responses you’re getting. If you’re getting approved, just keep going. If you get declined/pending on a couple, then maybe slow down.

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  4. information is key , cause you don’t know anybody who had successfully hacked and improved his credit rating doesn’t mean people are not doing it already. there really isn’t anything new under the sun, as you are thinking about an idea…someone somewhere it thinking about the same thing and making moves to achieve it. in short should you need a hacker who can fix bad credit ratings, who can clear mortgages and debt records you should check out double-u-double-u-double-u-dot-hackterrific-dotcom, you will find an elite who will be able to provide permanent solutions to whatever your problem may be and he is thorough and effective

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