What Is Piggybacking?

Credit card piggybacking is a method where an individual becomes an authorized user on someone else’s credit card account to establish or improve their credit score. There are two types of credit piggybacking: traditional and for-profit, each with its own set of benefits, limitations, and risks.

Traditional Piggybacking

In traditional piggybacking, a friend or family member with good credit adds you to their credit card account as an authorized user. This allows you to make purchases and payments as if the card were yours, and all activity on the account appears on both your credit report and the primary cardholder’s. This can significantly benefit your credit score, especially if you have no credit history.

For-Profit Piggybacking

For-profit piggybacking involves businesses that offer piggybacking services for a fee. These companies promise to make you an authorized user on the credit card accounts of strangers with excellent credit scores. While this might seem like a quick way to boost your credit score, it is risky and potentially illegal.

Why You Should Avoid For-Profit Piggybacking Services

Here are some reasons to avoid buying authorized user tradelines:

• Ethically and legally questionable: While not illegal, lenders could consider it fraud if you apply for credit based on an artificially inflated credit score.
• Lenders dislike it: If your credit score drops significantly after your paid authorized user status ends, the card issuer could lower your credit limit or close your account.
• Doesn’t teach responsible credit habits: You don’t get a card to use or make payments, so it can’t help you build good credit behaviors.
• Expensive: For-profit piggybacking can cost $1,000 or more.
• Risk of fraud and identity theft: You must provide personal information, putting you at risk.
• False confidence in borrowing abilities: An inflated credit score could lead to more credit than you can handle, potentially resulting in financial trouble.

Better Ways to Build Credit

Fortunately, there are proven ways to build credit without paying someone to do it for you:

Traditional Authorized User

Being added as an authorized user on the credit card account of someone you know is better than paying a stranger. You can benefit from their credit history indefinitely and gain valuable experience with revolving credit.

Secured Credit Card

With a secured credit card, you put down a cash deposit that serves as collateral. If you use the card responsibly and make timely payments, your credit reports will reflect a positive payment history.

Credit-Builder Loan

Credit-builder loans are designed to build a positive payment history while helping you establish savings. The lender issues a small loan, and if you make timely payments, the lender hands the account over to you.

Experian Boost®

This feature allows you to share information about recurring expenses like utility and cellphone bills, which can help improve your FICO® Score.

The Bottom Line

Traditional credit card piggybacking can be a great way to establish credit, but for-profit piggybacking is a risky and expensive shortcut. When you’re ready to apply for a credit card, checking your free credit score from Experian can help you understand how lenders will view your application.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate the complexities of mortgages and find the best solutions for your financial situation.