What Does 'Piggybacking' Mean for Credit Card Users?

Credit cards are an effective tool for building or rebuilding credit provided they are used in the right manner. For people without credit or those with bad credit, there are several options for getting a conventional credit card that will have a positive impact on your credit score. ‘Piggybacking’ is one such option.

What is Piggybacking?

Piggybacking essentially means you are using the good credit of another person to improve your own credit rating. This is accomplished by becoming an authorized user on another person’s credit card account. As long as the primary cardholder has an excellent credit track record that includes paying bills on time and never overextending their credit lines, piggybacking may be a viable way to boost a credit score.

Many times a child of a cardholder will also piggyback onto a parent’s account in order to establish a credit history early. This can be a risky proposition if a parent and child do not clarify the expectations of a teen using a card but it can be beneficial to a young adult credit wise.

What You Should Know

By associating with a person who has a lengthy and strong credit history, a credit score can be improved over time. However, the new FICO scoring model now in place does things differently than in the past. The new scoring model will differentiate between being a primary card holder and an authorized user. In the past, there was no such identification and the incentive to piggyback on someone else’s credit worked. Now, FICO doesn’t recognize authorized users in the same way. This measure was taken due to concern about ‘pay to piggyback’ programs that were being launched by less-than-reputable companies who accepted cash for illegally piggybacking on the credit of others.

While the benefits of piggybacking can be positive, the reverse is also something to consider. As an authorized user on an account, your credit could be affected adversely should payments be made late or miss entirely.

What You Should Do

Instead of relying on someone else’s good credit to boost your own score, take the time to start improving your credit history in a more efficient manner. Apply for a secured credit card, which requires a cash deposit like a prepaid card but has the benefit of information being reported back to the credit reporting bureaus. After reestablishing your credit and using the secured credit card in the right way, you will eventually be able to upgrade to a conventional unsecured credit card.

Piggybacking isn’t necessary illegal but it can cause a lot of problems for the primary cardholder and the authorized user over time. It is in the best interest of the consumer to stick to legal methods of improving credit so they can stand on their own credit-wise.