Credit Cards

What is credit card piggybacking and how does it work?


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Leveraging credit card is another term for becoming an authorized user on someone’s credit account, for the purpose of building credit. But there are a few different ways to take advantage of someone else’s credit, and some are safer than others.

Most commonly, when you’re “leveraging” to build credit, you become an authorized user on a trusted friend or family member’s card account. Choose someone with responsible credit habits and you can benefit from your good credit as you build your credit report.

But if you don’t have a friend or loved one who trusts you to become an authorized user, you can also pay for the service. It’s much riskier, but some credit repair companies will connect you to a stranger’s card for the same credit-building purpose, for a fee.

While experts don’t recommend that you pay a credit repair company to build credit, you can win if you become an authorized user on someone’s card if you’re careful. This is what you need to keep in mind.

What is piggybacking?

Piggybacking means becoming an authorized user of someone else’s card to help establish or increase your credit score.

“If you have no credit, or very little, then this will give you additional content for your credit report,” says Summer Red, AFC®, senior manager of education at the Association for Education in Financial Planning and Counseling.

When you are an authorized user, you will have access to a credit card linked to the primary user’s account and will be able to charge purchases and use the card as you would any other credit card account. But while you may have a payment agreement with the primary account holder, they are solely responsible for making the monthly payments. “Assuming you are an authorized user of someone with a positive credit and payment history, that would be a boon to your credit score,” says Red.

Another way to become an authorized user is to pay a credit repair company to connect you with a stranger and benefit from your positive payment history as an authorized user, although this can be inefficient, unsafe and expensive. In fact, credit repair company BoostMyScore settled with the Federal Trade Commission in 2020 after the agency accused the company of misleading customers with promises to “drastically and immediately” improve their credit and even qualify for mortgages, while collecting thousands of dollars.

For most people, building credit through piggybacking is much safer and more affordable if you do it with the help of friends and family, not credit repair companies.

How does Piggybacking work?

If you’re looking to build your credit through a family member or friend, you want to make sure their credit is up to date and they’re already using your card responsibly. You can then discuss terms, such as whether you’ll actually use the card or just add your name for credit building. You’ll also want to make sure the card issuer reports authorized user information to all three credit bureaus; if payment history is not reported, you will not see any improvement in your credit.

The cardholder provides the issuer with any relevant information about you, and then begins building credit history from the primary cardholder’s usage, with no legal requirement to pay bills.

“Becoming an authorized user is one of the traditional ways of establishing credit for the first time for many people, particularly young adults,” says Rod Griffin, senior director of public education and advocacy at Experian.

The card appears on your credit report and shows you as an authorized user. If the primary account holder is behind on payments and the account is negative, your credit as an authorized user may be negatively affected. In this case, Experian will remove the account from its history, says Griffin.

The most impactful way being an authorized user helps your credit is through a positive payment history, but it can also affect other factors that influence your score. Details vary, but you should see an improvement in your credit utilization ratio—how much of your credit allowance you’re using.

Talk to the primary cardholder to find out how much credit you use monthly. “Your goal is to try to keep your credit utilization below 30%, and ideally below 10%,” says Red.

What are the risks of piggybacking family or friends?

Family and friends are a better choice than strangers if you’re looking to access someone else’s credit history, but keep in mind that relationships could suffer if things go wrong.

“It’s that old axiom: ‘Be careful doing business with friends and family, because things can happen,’” says Griffin. “It wouldn’t be of much benefit if they’re not paying that bill on time, or if they have large amounts of debt on that account or a high utilization rate,” says Griffin.

This way, it can get a little complicated, Red says. “It’s one of the reasons I would never want to recommend anyone to give someone a credit card that they’re not obligated to pay. It’s like co-signing but worse.”

credit repair companies

Paying a credit repair company to connect you with someone who will link you to your credit history for a fee is a risk experts discourage.

“There are some shady companies out there that are hooking up complete strangers, which I think is a terrible idea on multiple levels,” Red says. complete stranger, and this complete stranger will help you build your credit.’”

Not only are you exposing yourself to potential identity theft, but the practice also comes at a high cost. “You could probably use the hundreds of dollars you’re spending on this so-called service to pay off the debt you owe,” says Griffin.

Plus, being an authorized user still wouldn’t break even if you have large amounts of debt or delinquencies, Griffin says. “It’s a minimal impact in a positive direction, if any.”

pro tip

Before you try to use your credit card, you can explore other ways to build your credit report.

Should I try credit support?

Becoming an authorized user with a trusted friend or family member can be a solid way to build your own credit. Over time, you’ll build your score and become eligible for your own card accounts, then use them to maintain responsible credit habits.

“A person would build credit with other accounts and have their own history established at the time the authorized user account is deleted,” says Griffin. “That new history would offset and outrank that authorized user account,” she says.

It can take about six months to get your first credit score, so you may have at least six months to a year to stay in the authorized user account.

You can also build your credit through new tools designed to help you get started. “Once a person has a credit history, it’s a foot in the door to help break predatory lending cycles,” says Griffin.

For example, TransUnion’s Experian Boost and eCredable Lift help you add up to two years of payment history on your utilities and other regular bills, and FICO’s UltraFICO Score takes into account banking history and more alternative information, all of which can increase your credit score.

Keep in mind that different credit bureaus calculate your score differently, especially when you use these programs. Your lender may use information from a different credit bureau that has a different score than those affected by these methods.

You can also become the primary cardholder, which counts the most in your credit score, with a secured credit card. “You can get a secured credit card where you basically give a bank or credit card a security deposit and they deposit it into a bank account,” says Red.

The issuer uses the deposit as collateral in case you don’t pay your balance, and you’ll usually get it back when you close your account in good standing or upgrade to an unsecured credit card once your score improves.

The important thing is to start building your credit before you need it, says Red.

“One of the big challenges I find is that people realize they need credit before they start building it. Since you can’t get a time machine and go back and build your credit, you have to start building before you really need it.”

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