It’s tough to find a side hustle with the right ratio of effort to payoff, but I think I’ve found another winner. This side gig involves almost no time or energy and is as simple as selling my credit tradelines.
A more accurate description would be ‘renting’, as the buyer only has temporary access.
At its very basic state, selling tradelines is selling access to your good payment history so that someone who has poor credit can boost their score. This is done by adding them as an authorized user on your account.
The entire transaction is typically brokered by a credit-boosting company. The person with poor credit pays the company and then the company pays you upon completion.
Sounds crazy, but it works.
The key to the whole shebang is having good credit and a fair amount of credit cards. If you have neither of those things, you won’t find that this is as successful for you as it could be.
Lets start with the basics.
How to make money selling credit tradelines
In the non-frugal consumer driven world, everything is run on credit. Buying a couch – put it on credit! Buying a car- put it on credit! Getting an apartment- you need good credit!
If you don’t have good credit, you either won’t be approved for the thing that you want, or you’ll get it with an insane interest rate. Nobody wants to pay a 10% interest rate if they could potentially be paying 3%. So, how do they fix it?
This is where you come in. The person with poor credit pays the credit boosting company a set amount, say $500. The credit boosting company then pairs that person up with you, acting as a middleman or a matchmaker.
The company pays you based on the age of your credit card and the credit limit (the older the card and the higher the limit, the better!)
You won’t get the full $500, but you could make between $50 and $300 depending on the quality of your tradeline.
So, once you have been paired with your poor credit person, (I’ll refer to them as ‘authorized user’ from now on) you will add them to your credit card as an authorized user.
This is a process that can typically be done online with almost no hassle. Login, add authorized user, log out. Done.
Limiting your risk
The authorized user doesn’t have access to spend money. The new card is mailed to you, where you can destroy it as soon as it comes in.
You will need to continue to do some minor spending on your card to maintain activity; pay a bill or purchase something online every once in a while, then pay it off at the end of the month.
After a short amount of time, usually a couple of months (or whatever is agreed upon), you simply call your credit card company and have them removed as an authorized user. The total time you will spend on the whole deal would be less than a half hour.
Doing this for more than one authorized user at a time can easily net you a few hundred dollars in a weekend for nothing more than a few minutes and access to your good credit.
Is this legal?
Okay so now that we understand the basics, lets get into the nitty gritty. Is this legal? How do you claim this money on your taxes? Can your credit cards get shut down? How do you choose the right boosting company for you? What credit cards are the best? Can the authorized user mess up my credit?
All important questions.
Lets start at the top. When you are going to add an authorized user to your credit card, you need to make sure that your card and card company are prepared to add users.
Some are better than others when it comes to this, so you should consult your credit card company before doing anything. (I wouldn’t recommend straight-up telling them that you plan to sell your tradelines, they tend to frown on that.)
Citi Bank, Discover Card, Bank of America, and others will all allow you to add authorized users without too much of a hassle. The credit line will show up on their credit, and their account will show up on your card for you to track.
Selling your credit tradelines is not illegal. However, it is against most credit card terms of service, which is why I seriously do not recommend telling your bank or card company about what you are doing.
If they find out you do run the risk of getting your account closed. To prevent this, limit the number of authorized users you take on for each of your banks or credit companies. You also may want to allow them to stay on for at least two months to ensure nothing looks shady to your credit card company.
Even if you do get shut down, most companies will only shut down the single card that they took issue with. If you have multiple credit cards or bank accounts with the companies, those are safe.
Will this hurt my credit?
The biggest question of the whole process is whether or not adding this random person to be an authorized user will affect your credit.
The authorized user does not have any access to the card, and therefore has no way to impact your credit whatsoever.
Even if the person had less than honorable intentions and tried to call the bank to get a “replacement” card mailed to them, they wouldn’t have the necessary information to verify your identity.
How to claim this on your taxes
How do you claim this money as income to the IRS? The credit boosting company will give you a 1099 to report to the IRS.
You’ll want to do a good bit of your own research to find a company that is reputable and will work for you and your needs.
Try to find a company that has been in business for at least four years, as there are scammers are out there.
Make sure they accept credit cards from your bank or credit card company, with the specific age and credit limits of your newest and lowest limit cards.
Finally, make sure you ensure they have the best technology for your security.
Ready? Sell your tradelines
I hope this is as lucrative for you as it looks like it will be for me! I only have one card that qualifies right now but will hopefully add more over time.
One other note – If you are anything like I was ten years ago, you have one credit card with a $1000 limit, and you try your darnedest to never spend on it (thinking back, I probably should have stuck with this plan).
This probably won’t work for you if that is the case. Most companies require at least a $5,000 limit and active spending (and subsequent payment history).There are other ways to make decent money on the side.
Let me know if you try it and how it works!
Here are a few tradeline brokers. I haven’t used any of them (yet) and therefore can NOT recommend any imparticular. Check out a few of them, do your search, and then decide.