How Credit Card Piggybacking Works
Credit card piggybacking refers to boosting your credit score by becoming an authorized user on someone else's credit card. This can help your score if the cardholder has good credit, but it's important to be aware of potential pitfalls that can come with credit piggybacking if you're not careful.
What Does Piggybacking Credit Mean?
Credit piggybacking is the process of someone improving their credit score by becoming an authorized user on another person's credit card account. If your credit score is low or you lack sufficient credit history to get credit on your own, piggybacking can be an effective way to give your score a boost.
In some cases, people piggyback credit without even realizing it. For example, if your parents added you to their credit card while you were in college, you might have benefited from their good credit simply by being an authorized user on their card.
If you're interested in improving your credit score by becoming an authorized user, it's important to choose someone with a good credit score. If you pick someone with late payments or delinquent accounts on their credit report, this is more likely to hurt your score than help it.
Also keep in mind that credit piggybacking involves risk on the part of the primary account holder. If an authorized user fails to pay their share of the amount charged, the primary account holder is responsible for the entire balance.
Is Piggybacking Credit Legal?
It's legal to add someone as an authorized user to a credit card, but credit piggybacking can enter murky legal territory if you piggyback credit with an intent to deceive lenders, as this may be considered fraud.
However, there is no legal precedent for someone being charged with fraud simply because they became an authorized user on a credit card with the intention of improving their credit score. Furthermore, there are a number of reputable companies that sell tradelines and, to date, none of these companies have run afoul of federal regulators.
Is Piggybacking Right for You?
Credit piggybacking might work for you, but it depends on your situation and the account you're looking to join. This is because not all creditors report authorized users to the credit bureaus, which means an authorized user's credit report won't show any of the card's activity.
Before you start credit piggybacking, you should also make sure you can pay off any money you charge to the card. In fact, it's a good idea to avoid using the card at all so you don't end up owing money you can't afford to pay.
Types of Piggybacking
There are two main types of credit piggybacking: person to person and for profit. Person to person piggybacking involves becoming an authorized user on the card of someone you know, whereas for-profit piggybacking involves buying a tradeline from a tradeline company.
Person to Person
Person to person credit piggybacking is the most straightforward way to piggyback on someone else's credit. With this type of credit piggybacking, you ask a friend or relative to add you as an authorized user on their account.
Free - In the majority of cases, you won't pay anything for the privilege of becoming an authorized user.
Can be long term - With person to person piggybacking, you can stay on the account holder's account indefinitely, which can help your credit score improve over time. This is a contrast to for-profit piggybacking, which typically only lasts a few months.
Not all creditors report authorized users to the credit bureaus - Some credit card companies don't report authorized users to the three major credit bureaus — Experian, Equifax, and TransUnion. Before you piggyback credit, ask the credit card company if the card activity will appear on your report.
Can strain relationships - Financial disputes can end friendships and strain relationships. Before you ask someone you know to add you to their credit card, be certain the arrangement has enough safeguards to protect both parties.
For-profit piggybacking is commonly referred to as "buying a tradeline." If you don't know someone with good credit who's willing to add you to their account, you can "borrow" a stranger's good credit by paying to be added as an authorized user.
However, this type of credit piggybacking doesn't give you access to the cardholder's available credit. Instead, you can think of buying a tradeline as temporarily renting someone else's good credit to give your own credit score a short-term boost.
If you're interested in becoming an authorized user, there are several good tradeline companies to check out. The companies on this list are known for offering a combination of experience, value, and integrity.
Can improve your credit score - Buying a tradeline can raise your credit score enough to help you qualify for a better interest rate on a loan.
Fast results - Repairing your credit on your own takes time, which can be problematic if you're trying to get a car loan or finance a new home. Using for-profit credit piggybacking is a much faster way to improve your score on a short-term basis.
Temporary solution - Buying a tradeline is a short-term way to temporarily raise your credit score. Generally, the tradeline will only show up on your credit report for between two and six months.
Can be expensive - The best tradelines are "seasoned" accounts, which means they have a lengthy credit history. The more seasoned the account, the more you can expect to pay, with the most desirable accounts costing thousands to "rent."
Scammers - Unfortunately, not all tradeline companies are reputable. Before you buy, make sure you do your homework on the company offering the tradeline.
How Do You Piggyback Someone's Credit?
The most straightforward way to piggyback credit is to ask someone you know. In most cases, getting added as an authorized user is a simple process you can accomplish with the following steps:
Ask a friend or family member with good credit to add you to their account as an authorized user.
Complete any forms or paperwork the credit card company requires for you to become an authorized user.
Check your credit report to make sure the card activity appears on your credit report.
Monitor your credit score to make sure your score is improving. You can check your score for free by signing up for the Discover Credit Scorecard, which is open to everyone regardless of whether they have a Discover card.
Will Being an Authorized User Increase My Credit Score?
Being an authorized user can improve your credit score, but it's important to make sure the primary account owner is a responsible credit user. If they miss a payment or let the account go into default, this will hurt your score.
Does Piggybacking Help or Hurt Your Credit Score?
Credit piggybacking has the potential to help or hurt your credit score depending on how the primary account holder uses or abuses credit. If you're using the person to person method of credit piggybacking, you can protect yourself by only working with someone you know is trustworthy and responsible with their finances.
There is arguably less risk of hurting your score when you purchase a tradeline from a tradeline company. This is because reputable tradeline companies vet each account holder before offering a tradeline, so you can rest easy knowing the account will be seasoned and properly maintained.
How Much Can Piggybacking Raise Your Credit Score?
Many factors determine how much credit piggybacking can improve your score. For example, if you become an authorized user on a relative's credit card with a perfect payment history spanning 20 years, this is likely to raise your score a lot more than a card that's only a few years old.
According to a 2010 study from the Federal Reserve, credit piggybacking offered the most benefit to authorized users with credit histories less than two years old, with these users seeing an average credit score increase ranging between 40 and 60 points.
How Long Does Piggybacking Credit Take Before I See the Tradelines on My Credit Report?
The time it takes for a tradeline to appear on your credit report varies, but you will typically see the tradeline show up within one reporting cycle, which is around 30 days. According to one of the leading tradeline companies, some people see their tradeline show up within 11 days of purchase.
Piggybacking Risks and Abuse
Credit piggybacking isn't without risk. Furthermore, there is risk on both sides of the arrangement, which is why it's important to be careful if you use piggybacking to improve your credit score.
For the account holder using the person to person method to help out a friend or relative, there is always a risk an authorized user with access to credit will make purchases and then fail to pay them off. Ultimately, the primary account owner is responsible for the charges, so they could end up paying a bill they don't truly owe.
Piggybacking can also expose an authorized user to risk. When you become an authorized user, you have to trust the primary account owner to maintain their good credit, as any late payments or other negative activity can damage your score.
In addition, some lenders and financial institutions frown on credit piggybacking. If a lender sees you're an authorized user on a seasoned account that doesn't match the rest of your credit profile, they may turn you down for a loan.
Best Practices for Credit Piggybacking
Credit piggybacking can help improve your credit score, but only if you're careful about how you use this method of boosting your score. Here are some best practices to keep in mind.
Piggyback with someone you know and trust - Ask a trusted friend or relative if they're willing to add you as an authorized user to their account. Avoid working with someone you don't know that well, as their financial mishaps will be reflected on your credit report if they fail to use credit responsibly.
Make sure the creditor reports to the credit bureaus - Credit piggybacking won't do you any good if the creditor doesn't report authorized users to the credit bureaus. Before you become an authorized user, double check that the card will appear on your credit report.
Monitor your credit - As an authorized user, you're dependent on the primary account holder to use their credit in a responsible way. You can't control how they use their card, but you can monitor your credit report to make sure the account isn't hurting your score.
End the arrangement if you need to - Don't hesitate to remove yourself as an authorized user if the primary account owner submits a late payment or begins carrying a large balance. Both of these scenarios can negatively impact your credit score, which is why it's important to regularly monitor your credit report.
How to Improve Credit Without Piggybacking
If you're on the fence about credit piggybacking, there are plenty of ways to improve your score on your own. Here are some options to consider.
Get a secured credit card - Secured credit cards are designed for people who struggle to qualify for traditional credit cards. With a secured card, you pay a small amount up front as a security deposit against the possibility of default.As you make purchases and then pay off your balance, your positive payment history gets reported to the credit bureaus. Over time, this will improve your credit score, which can help you build enough credit to qualify for a traditional credit card.
Get a credit builder loan - With a credit builder loan, the bank puts aside a specific amount of money and then you make monthly payments toward the balance. Once you have paid the full loan amount, the balance is yours to keep.Banks that offer credit builder loans report your positive payment history to the credit bureaus, which can improve your credit score.
Get credit for paying utility, streaming, and phone bills on time - Experian Boost is a free service that lets you add certain bills to your credit report so you get credit for paying them on time. You can add utilities, phone service, and streaming services like Netflix and Hulu to your reported items, however, these payments will only help improve your FICO score.
Piggybacking credit can be a legitimate and effective way to raise your credit score, but it's important to be careful when using this method to improve your score. Whether you ask a trusted friend or relative to add you to their account as an authorized user, or you purchase a tradeline from a reputable company, you should do your homework and shop around before making a decision.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.