Credit piggybacking is using someone else’s good credit to raise your own score. It works like this: if you find yourself with a low credit score, you probably know how difficult it is to borrow money and how you are penalized by higher interest rates on borrowed money. So how do you raise your credit score quickly? Credit piggybacking. If you are made an authorized user on another’s account, one with a good credit score, your score will raise – pretty quickly – also.
This tactic has been used for quite awhile by parents that wanted to give their children a head start in building their credit history.
Trouble is, credit rebuilding businesses started taking advantage of this ploy, and matched people that wanted to build good credit with people that had good credit. The credit repair companies naturally would collect a fee. They found people with good credit that were willing to sell slots on their credit cards, paying them for those slots, and then selling the slots to people with less than desirable credit. The people buying the good credit didn’t actually have access to the account, but their score was lifted by being considered an authorized user.
Along came Fair Isaac, the company that determines your FICO score, in 2007 announcing changes to the way scores are determined. One of the changes was the elimination of credit piggybacking as a way to boost a score. Credit score booster companies cried foul, and challenged Fair Isaac. Long story short, Congress, the Attorney General, and the FTC agreed with the credit boosters.
Fair Isaac has revised its scoring method somewhat, being an authorized user will still boost your score, but you have to have a tie to the good credit holder. This means you have to be a spouse or child of the account holder. And, you have to have actual access to the account; you are an actual authorized user.
So is credit piggybacking a good idea? Perhaps if you are a spouse or child of the cardholder, but if not, there are better ways of improving your credit.
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