Finance:Credit fracking

From HandWiki

Credit fracking is a term used by bankers and creditors when breaking up the credit history of a company to piggyback onto another company to raise the credit score or credit line of the new company.

The best way to describe Credit Fracking is if 1 or 2 investors buy a company and then break it up into smaller pieces and sell it off to hundreds or thousands of individuals for a profit. The same thing applies to credit history. Most companies have large credit lines and have made thousands of payments on time and even after that business is no longer in operation, its credit history remains intact and can be sold off to investors to do with as they please. Investors buy the credit history and sell off pieces of it to other companies and private individuals to piggyback and raise their credit score or loan availability. Credit fracking is frowned upon in the banking community but it is not illegal.

References