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Piggybacking credit, also known as becoming an authorized user, has become a popular way of improving one’s credit score in recent years. By adding an individual as an authorized user to another person’s credit card account, both parties can benefit from on-time monthly payments. That said, it’s important to have a full understanding of piggybacking credit and the risks involved before deciding whether or not to become an authorized user.
In this article, we answer the question, “what is piggybacking credit?” and cover how it works, plus the very real risks involved.
Highlights/ Key Takeaways
- Piggybacking credit is the practice of becoming an authorized user on someone else's credit account in order to benefit from their positive credit history.
- Piggybacking credit repair can potentially help improve your credit score, but it also carries risks if not done carefully.
- There are two types of piggybacking credit: person-to-person credit piggybacking and for-profit credit piggybacking.
- To qualify for piggybacking credit, you must be added as an authorized user on someone else's account and meet the qualifications set by the primary account holder and the credit card issuer.
What Is Piggybacking Credit?
Piggybacking credit is a credit-building strategy where an individual benefits from someone else's credit history. Specifically, the individual becomes an authorized user on another person's credit account(s), thereby gaining access to the positive credit history associated with those accounts.
This practice is commonly utilized by individuals with limited or poor credit histories who are seeking to establish or improve their credit scores. Here are some key points to keep in mind about piggybacking credit:
- Piggybacking credit involves becoming an authorized user on another person's credit account(s).
- The authorized user gains access to the positive credit history associated with those accounts, which can help to establish or improve their own credit score.
- This practice is commonly utilized by individuals with limited or poor credit history.
- The primary account holder retains full responsibility for making payments on the account, even if the authorized user is benefitting from the positive credit history.
How Does Piggybacking Credit Work?
Piggybacking credit is a relatively simple process. Generally, here’s how it works:
- Identify a primary account holder. The first step is to identify someone who is willing to add you as an authorized user on their credit account(s). This is typically a family member or close friend.
- Agree on the terms. Before becoming an authorized user, it's important to discuss and agree on the terms of the arrangement. This includes how long you’ll remain an authorized user, how you’ll use the account, and who will be responsible for making payments.
- Add the authorized user. Once the terms are agreed upon, the primary account holder can add the authorized user to their account(s). This typically involves contacting the credit card company and providing the authorized user's personal information.
- Start using the account. Once added, the authorized user can start using the account as they see fit. However, it's important to use the account responsibly and make payments on time to avoid damaging the primary account holder's credit score.
- Monitor the credit report. The authorized user should regularly monitor their credit report to ensure that the positive credit history associated with the account is being reported accurately.
What Types of Credit Piggybacking Are There?
Piggybacking credit can take different forms, with some methods involving direct arrangements between individuals and others involving for-profit companies. Here are the two common types of credit piggybacking:
Person-to-Person Credit Piggybacking
Person-to-person credit piggybacking is a direct arrangement between two individuals, with one person adding the other as an authorized user to their credit account. This type of credit piggybacking is typically done between family members or close friends, with the goal of helping the authorized user build or improve their credit score.
The primary account holder retains full responsibility for making payments on the account, even if the authorized user is benefitting from the positive credit history. As such, it's important to choose a trustworthy and responsible individual to piggyback credit with.
For-Profit Credit Piggybacking
For-profit credit piggybacking involves working with a company that specializes in matching individuals with excellent histories with those seeking to piggyback credit. These companies typically charge a fee for their services and may offer guarantees for specific credit score increases.
While for-profit credit piggybacking can be effective, you need to do your research and choose a reputable company. Some for-profit credit piggybacking companies have faced legal challenges in the past, and the practice is not always viewed favorably by lenders and credit bureaus.
What Are the Benefits and Risks of Credit Piggybacking?
When used correctly, becoming an authorized user on someone’s account is an incredibly simple way to build credit. Enter into an agreement that doesn’t work out, though, and you could harm one of your relationships and even hurt your credit score in the process.
Benefits of Credit Piggybacking
Here are some of the main advantages of using piggybacking credit:
- Easily establish a credit history. Individuals with little or no credit history can use piggybacking credit to establish a positive credit history by being added as an authorized user on a credit account with a long and positive payment history. This can help them to qualify for loans and credit cards in the future.
- Improve your credit score. Piggybacking credit can also help individuals with poor credit scores improve their scores by adding positive credit history to their credit reports. This can improve their creditworthiness and make them more attractive to lenders.
- Cost-effective. Piggybacking credit can be a cost-effective way to build or improve credit, especially when compared to other credit-building strategies such as secured credit cards or credit builder loans.
Potential Risks of Credit Piggybacking
- May hurt your credit history in certain situations. If the primary account holder has a negative credit history or a history of late payments, this can negatively impact the authorized user's credit score. If the primary account holder closes an account you’re an authorized user on, this could also drop your score.
- Responsibility for debt. While the authorized user is not legally responsible for any debt incurred on the account, they may still be held responsible by debt collectors if the primary account holder defaults on the debt. This can lead to collection calls and even legal action against the authorized user.
- Damage to relationships. Piggybacking credit involves a degree of trust between the primary account holder and the authorized user. If the authorized user makes purchases on the account without the primary account holder's knowledge or fails to pay their portion of the bill, this can damage the relationship between the two parties.
- Scams and fraud. There are several fraudulent companies that claim to offer credit piggybacking services but are actually engaging in illegal activity. These companies may charge high fees or steal the personal information of individuals who sign up for their services.
Who Can Benefit from Credit Piggybacking?
Credit piggybacking can be a useful strategy for individuals who are looking to build or improve their credit scores. Here are some groups of people who may benefit from using piggybacking credit:
- Individuals with no credit history. If you have never had a credit card or taken out a loan, you may have little to no credit history. This can make it difficult to get approved for credit of any kind in the future. Piggybacking credit can help you establish a positive credit history by being added as an authorized user on someone else's account with a long and positive payment history.
- Individuals in need of a credit boost. If you’ve had credit but made some mistakes in the past and now need a quick boost to your credit score, piggybacking credit can be a useful strategy. This can help you qualify for loans and credit cards with better terms and lower interest rates.
- Young adults. Young adults who are just starting out may also benefit from piggybacking credit. This can help them to establish a positive credit history and build credit for the first time. It can also help them to qualify for loans and credit cards in the future.
- Immigrants and newcomers to the country. Immigrants and newcomers to the country may have difficulty establishing credit, as they may not have a credit history in the United States. Piggybacking credit can help them to establish a positive credit history and build credit over time.
What Are the Qualifications for Piggybacking Credit?
In order to piggyback credit, there are certain qualifications that you’ll need to meet. Here are some of the key qualifications for piggybacking credit:
- The primary account holder must have a good credit history. In order for piggybacking credit to be effective, the primary account holder must have a history of being a reliable borrower. This means that they should have a low debt-to-credit ratio, a history of on-time payments, and a good credit score. If the primary account holder has a poor credit history, this can negatively impact the authorized user's credit score.
- The primary account holder must be willing to add an authorized user. In order to piggyback credit, the primary account holder must be willing to add an authorized user to their account. This means that they will need to provide the authorized user's name and other identifying information to the credit card company.
- The authorized user must have a social security number. In order to be added as an authorized user, the individual must have a valid social security number. This is because the credit card company will report the authorized user's credit history to the credit bureaus under their social security number.
- The authorized user must trust the primary account holder. The authorized user will not have access to the account, but they will be associated with it and their credit score will be impacted by the primary account holder's payment history. It is important for the authorized user to trust the primary account holder and to ensure that they’re implementing the strategy responsibly.
How Long Does Credit Piggybacking Take to Work?
If you are considering piggybacking credit to improve your credit score, one of the most common questions you may have is how long it takes for the strategy to work. Here are some factors that can impact the timeline for piggybacking credit:
- The primary account holder's credit history. The primary account holder must keep the accounts in good standing for your score to go up at all.
- The authorized user's credit history. If the authorized user has a limited or poor credit history, it may take longer for piggybacking credit to have an impact. This is because the authorized user's credit score is calculated based on a variety of factors, including their own credit history, the length of their credit history, and their debt-to-credit ratio.
- The credit reporting agencies. The credit bureaus may take several weeks or even months to update an individual's credit report with new information.
- The credit score model used. There are several different credit score models used by lenders and credit bureaus, and each model may weigh factors differently. This means that the impact of piggybacking credit on an individual's credit score may vary depending on the specific credit score model used.
In general, paired with other responsible credit practices, most individuals will see a slight change in their scores in 30 to 45 days.
Does Piggybacking Work with All Credit Cards and Loans?
Piggybacking credit can be an effective strategy for building or improving credit, but it may not work with all credit cards and loans. Whether or not you can be added as an authorized user depends on two factors:
- The credit card company or lender's policy. Some credit card companies and lenders do not report authorized user information to the credit bureaus. This means that even if you’re added as an authorized user, your credit score may not be impacted. Check with the credit card company or lender to determine their policy on reporting authorized user information.
- The type of credit card or loan. Piggybacking credit is typically most effective with credit cards, as they tend to have a greater impact on an individual's credit score. However, it may also be possible to piggyback credit with other types of loans, such as personal loans or auto loans.
How Much Will Piggybacking Raise My Credit Score?
A Federal Reserve study from 2010 found that piggybacking can raise authorized users’ scores by 45 - 64 points. So it won’t necessarily boost your score by hundreds, but it can be the difference between a fair credit score and a good credit score.
Whether your score goes up by a few points or 60 depends on a variety of factors like:
- The primary account holder's credit history. If the primary account holder has a long and positive credit history, piggybacking credit can have a significant impact on an individual's credit score.
- The authorized user's credit history. Piggybacking credit may be more effective for individuals with limited or poor credit histories, as they have more room for improvement.
- The continued habits of both borrowers. If you and the primary borrower suddenly overspend and can’t make your payments in full, both of you will only see a minimal increase, if not a decrease, in your scores.
What Are the Top Credit Piggybacking Companies?
It's essential to do your due diligence before working with any of these companies, as there are many scams and unethical practices in this industry. That being said, here are some of the top credit piggybacking companies to consider:
- Tradeline Supply Company. Tradeline Supply Company is a reputable provider of credit piggybacking services. They offer a range of packages for customers looking to improve their credit score, with prices starting at around $230.
- Superior Tradelines. Superior Tradelines has been in business since 2010 and offers a range of packages for customers looking to improve their credit score, with prices starting at around $600.
Is Piggybacking Credit the Right Choice for You?
Deciding whether piggybacking credit is the right choice for you depends on your individual credit situation and financial goals. Here are some factors to consider:
- Your credit goals. If your goal is to improve your credit score quickly, piggybacking credit may be a viable option. However, if your credit score is already strong and you're looking to maintain or further improve it, other credit-building strategies may be more appropriate.
- Your relationship with the primary account holder. Before agreeing to become an authorized user on someone else's account, make sure you have a strong relationship with the primary account holder and trust them to manage the account responsibly.
- Your ability to manage credit responsibly. While piggybacking credit can potentially help improve your credit score, it's important to remember that you're still responsible for managing your own credit. This means making timely payments, keeping debt levels low, and monitoring your credit report for errors.
- Alternative credit-building strategies. There are many other strategies for building credit, including secured credit cards, credit-builder loans, and paying bills on time. Consider all your options before deciding whether piggybacking credit is the right choice for you.
Piggybacking credit can be a useful strategy for individuals looking to build or improve their credit scores. By becoming an authorized user on a credit account with a positive payment history, individuals can potentially see an increase in their credit score. However, it's important to keep in mind that piggybacking credit does come with risks, particularly when working with third-party companies. It's crucial to do thorough research and carefully evaluate any piggybacking company before deciding to work with them.
Additionally, piggybacking credit should be used in conjunction with other responsible credit practices, such as paying bills on time, keeping debt levels low, and regularly checking your credit report for errors. Building good credit takes time and effort, but by using a combination of strategies, individuals can improve their creditworthiness and achieve their financial goals.