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Piggybacking credit, also known as becoming an authorized user, is when you are added to another person's credit card account, with the intention of establishing credit or increasing your credit score.
It's important to note there are risks associated with this practice and piggybacking is not a long term solution to building or improving your credit.
How Piggybacking Credit Works
If a person with good credit adds you as an authorized user to their credit card account, their payment history becomes part of your own credit report. For example, if they've had the credit card open for 10 years, your credit report would reflect an active credit account for that time frame too. If the primary cardholder has a positive payment history and keeps their account balance low, you may see a boost in your credit scores. However, if the primary cardholder falls behind on payments, that could hurt your credit scores as well, potentially making your credit situation worse.
Piggybacking doesn't always work. Not all credit card companies report authorized users to the three major credit bureaus (Experian, TransUnion and Equifax). In addition, becoming an authorized user doesn't help you learn and develop good habits on how to use and manage credit wisely. The best way to build credit and increase your credit scores is to obtain your own credit accounts, pay them all on time and maintain a low credit utilization ratio.
For-Profit Piggybacking Services
Beware of paid piggybacking services that target consumers looking to build credit. These companies pair you with a stranger with an excellent credit score who will add you as an authorized user to their account for a set time period—for a fee. There are significant drawbacks associated with using for-profit piggybacking services:
- It is a questionable and deceptive practice. Buying your way to a good credit score could be perceived as an attempt to deceive the lender, which could have legal implications. If the action is interpreted as bank fraud, it could be punishable by large fees, prison time or both.
- For-profit piggybacking services are expensive. Depending on the line of credit you choose, it can cost as much as $4,000.
- You have to 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's a short-term solution. If you pay for a piggybacking service, you're only an authorized user for a limited time. Once the term ends, the account is removed from your credit report, likely causing your credit scores to drop again.
- It won't help you learn responsible credit habits. This form of piggybacking won't help you build and maintain your credit over time by creating a history of positive payments, which is a critical factor impacting your credit scores.
- Lenders don't look favorably on the practice. When you're looking for a loan, your lender will want assurance that you know how to manage credit accounts. If they see that you're using a stranger to improve your credit, they may be less likely to approve your loan request.
- It may give you false confidence when borrowing. There's a reason lenders want to loan money to people who have good credit histories: They have more trust that these consumers will pay back their loans. Without real experience borrowing money and paying it back, either through a credit card account or other loan, you may not understand how difficult it may be to keep up with those monthly payments.
The good news is there are proven ways to build credit that don't involve paying someone to do it for you.
Ways to Build Credit
Here are other ways you can build your credit that provide longer-lasting results than piggybacking:
- Apply for a secured credit card: A great option for those with no credit history, a secured credit card is a card that requires you to place a deposit with your own money as collateral. The deposit acts as your credit line. As you make your payments, the card company reports your payments to the credit bureaus.
- Take out a credit-builder loan: When you take out a credit-builder loan, the lender sets aside the funds in a savings account and you make monthly payments. The lender reports your payments to the credit bureaus, and at the end of the loan term, the funds are released to you.
- Boost Your FICO® Score*: Get credit for the utility and telecom bills you're already paying by signing up for Experian Boost™†—a free tool that can increase your FICO® Score instantly.
With these options, you can steadily increase your credit scores over time without the cost of a piggybacking service.
Managing Your Credit History
As you work to improve your credit history, it's important to monitor your credit report and make adjustments to your financial behavior so you can see long-term results. Here are the five actions you can take to help positively manage your credit history.
- Pay all of your bills on time.
- Keep your credit utilization below 30%. With each of your revolving credit accounts, such as credit cards and lines of credit, make sure your balances stay low relative to the credit limits on the accounts. For the best credit scores, keep your utilization under 10%.
- Diversify the types of credit accounts you have (credit cards, personal loans, auto loans and so on) to create a good credit mix.
- Minimize the number of hard inquiries in your credit file over a short period of time. Too many inquiries can hurt your credit scores.
- Keep your accounts in good standing to avoid having negative information appear on your credit report, such as late or missed payments, foreclosures and collection accounts.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on June 27, 2019, and has been updated.
*Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.