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Understanding Piggybacking and How to Build Credit Responsibly

When seeking advice on improving or establishing credit, you might come across a tactic known as “credit card piggybacking.” Here’s what you need to know about it and why you should be cautious.

What Is Piggybacking?

Credit card piggybacking involves becoming an authorized user on someone else’s credit card account to establish or improve your credit score. There are two types of piggybacking, each with its own benefits, limitations, and risks.

Traditional Piggybacking

If a friend or family member with good credit adds you to their credit card account as an authorized user, you get a card with your name on it. You can make purchases and payments, and all activity on the account appears on both your credit report and the primary cardholder’s. This can benefit you significantly, especially if you have no credit history. The primary cardholder’s history of on-time payments can positively impact your credit score.

For-Profit Piggybacking

Some businesses offer piggybacking services for a fee, promising to make you an authorized user on the credit card accounts of strangers with excellent credit scores. This practice 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

There are proven ways to build credit without paying someone to do it for you:

• Traditional authorized user: Piggybacking 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 as collateral. Using the card responsibly can help build a positive payment history.
• Credit-builder loan: These loans help build a positive payment history while establishing small cash savings. Making timely payments can benefit your credit scores.
• Experian Boost®: This feature allows you to add recurring expenses like utility and cellphone bills to your Experian credit report, potentially improving your FICO® Score.

The Bottom Line

Traditional credit card piggybacking can be a great way to establish credit, but pay-to-play 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-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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