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When seeking advice on improving credit or establishing credit as a new user, you might hear of a tactic known as "credit card piggybacking." Here's how it works (or might not work), and what you need to understand about it.
What Is Piggybacking?
Credit card piggybacking is another name for becoming an authorized user on someone else's credit card account so you can establish credit or increase your credit score. There are two types of credit 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 typically get a card with your name on it that's attached to that account. You can make purchases and payments as if the card were yours alone, but all activity on the account—from your card and the primary cardholder's—appears on both your credit report and on the primary cardholder's.
What's more, payments made on the card, even before you became an authorized user, will also appear on your credit report.
That can benefit you tremendously, especially if you have no credit history of your own. The primary cardholder's history of on-time payments can benefit two factors that influence your credit score: payment history, which accounts for roughly 35% of your FICO® Score☉ , and age of accounts, which accounts for another 15% of the FICO® Score.
For-Profit Piggybacking
You may also encounter businesses that offer piggybacking services for a fee—sometimes marketed as authorized tradelines for sale. These companies promise that, for a limited period of time, they will make you an authorized user on the credit card accounts of one or more strangers with excellent credit scores.
The theory is that your credit score will benefit from the other user's credit history, giving you a chance to secure a credit card account or loan in your own name. The practice is risky and potentially illegal, however.
Why You Should Avoid For-Profit Piggybacking Services
Here are some reasons you should avoid buying authorized user tradelines:
- It is ethically and legally questionable. While there are no laws against paying for authorized-user privileges, lenders could consider it fraud if you apply for and accept credit on the basis of an artificially inflated credit score.
- Lenders dislike it. Even if they don't bring fraud charges, if you take out a credit card based on a piggybacked credit score and your credit score drops significantly when your paid authorized user status ends, the card issuer could lower your credit limit or even close your account—either of which could ding your credit scores.
- It won't help you learn responsible credit habits. You don't get a card to use or make any payments when you piggyback on a stranger's account, so it can't help you build and maintain good credit behaviors.
- Buying tradelines is expensive. For-profit piggybacking is expensive. Depending on the line of credit you choose, it can cost $1,000 or more.
- You must give up your personal information. To become an authorized user, you must provide the company with your name, address, birthdate and Social Security number. This puts you at risk of fraud and identity theft.
- It may give lenders false confidence in your borrowing abilities. A credit score that suggests you have more debt management experience than you actually do could prompt a lender to issue you more credit than you can handle. If you get in over your head and can't keep up with payments, you could tank your credit scores and even face bankruptcy.
Better Ways to Build Credit
The good news is there are proven ways to build credit that don't involve paying someone to do it for you.
- Traditional authorized use r: Piggybacking on the credit card account of someone you know is better than paying a stranger to do it for a variety of reasons. You can benefit from sharing their credit history indefinitely instead of just for a few months. You'll also be accountable to the primary cardholder if you start to get ahead of yourself with excessive charges on the card. And, since you'll presumably be making repayments for your own charges, you'll gain valuable experience with revolving credit.
- Secured credit card: With a secured credit card, you put down a cash deposit that serves as collateral on the card. The amount of the deposit is usually equal to your credit limit. If you fail to repay any charges, the lender will use your deposit to cover what you owe. But if you use the card and make at least the minimum required payment on time each month, your credit reports will rack up a positive payment history that can benefit your credit scores.
- Credit-builder loan: Available from a variety of sources, credit-builder loans are designed to build a positive payment history on your credit report while also helping you establish a small cash savings. The lender issues you a small loan (typically $300 to $1,000) with a repayment period of anywhere from six to 24 months. Instead of handing you the cash, they place it in a special savings account that's off-limits to you. If you make your monthly payments on time for the duration of the loan, the lender hands the account (and possibly some of the interest you paid) over to you.
- Experian Boost®ø: This feature of a free Experian user account lets you share information about recurring expenses such as utility and cellphone bills, insurance payments and streaming service payments and have them added to your Experian credit report, where they can help improve your FICO® Score.
The Bottom Line
Traditional credit card piggybacking can be a great opportunity to establish credit and gain experience as a credit user, but pay-to-play credit card piggybacking is a risky, expensive shortcut that misleads lenders and could make you legally vulnerable. When the time comes to apply for a credit card of your own, checking your free credit score from Experian can help you know how lenders will view your application.
