All parents want the best for their children and for years, some of them have taken advantage of credit card piggybacking to ensure their kids have a smooth sail on their credit. So, what’s piggybacking credit? Well, it’s like riding on the back of a horse, only that this is a piggy back in business terms, and it actually means using someone’s credit card account to improve your own credit score. Typically, it means being added to either a family member’s or a friend’s credit account as an authorized user. So, how can piggybacking boost your credit score?
To begin with, there are two types of credit card piggybacking which are:
- Traditional piggybacking
- For-profit piggybacking
1- Traditional piggybacking
Traditional piggybacking is simple. You just have to set a beer date with a trusted friend or relative and ask them to add you as an authorized user and afterward, their card’s payment history starts to show on your own reports. That’s if the credit card company reports about the credit activity of authorized users to the credit bureaus.
It’s not a must for you to use the credit card yourself so that piggybacking works. However, you can learn the basics by charging and paying off some small bills and purchases. Being listed on the primary user’s account as an authorized user means their payment history will start showing up on the side of your credit report. That as well, is if the credit company reports that way.
2- For-profit piggybacking
Thanks to the internet, you can find companies that can link you up with strangers. The strangers have verifiable perfect credit histories and they will be willing to add you to their cards for a few months, of course at a fee. The stranger’s credit line reflects on your credit report in those few months and inflates your score.
That automatically gives you an advantage of qualifying for a credit product and it’s actually legal to do it. However, you won’t receive a physical card and you won’t be able to charge anything to the account. Piggybacking on a stranger’s card can cost you much over $1000 depending on the age of the account and its credit limit.
So, how can piggybacking boost your credit score?
1- The credit card shows up on your credit report
When the credit card issuer reports about your authorized user account to the credit bureaus, you earn all the positive history on that account. For instance, if your parents have had the same card for seven years and they add you in as an authorized user, you will have a seven-year-worth account history on your credit reports.
2- You will be covered
Since you aren’t the primary cardholder, it’s not your responsibility to pay off the credit card monthly. The credit company can’t chase you around if the primary holder fails to meet their payments. That makes you immune, and your credit score will be achieved.
3- It benefits you
Piggybacking is essential for credit building and increasing your credit score. It’s more beneficial than being allowed to use a card but limited to debts. Any positive effect on your scores as an authorized account user is a result of your piggybacked card being utilized.
4- You can’t be affected by negative history
Your credit score could make a dive in case the primary cardholder doesn’t make payments on time and racks up a high balance. If it happens that the person hasn’t been making payments for a while, request the issuer to kick you out of the account and remember to contact the credit bureaus to confirm if it was removed.
5- It doesn’t take long to be an authorized user
Piggybacking has an added advantage regarding speed. Just 30 days after the request and your authorized user account is added to your credit report. Your credit score will shoot up after those 30 days and you’re good.
6- Your credit report will show the credit card
According to Rod Griffin who is Experian’s director of consumer education and awareness, it’s essential to work with someone who is responsible about their credit but if you become an authorized user and the primary owner is charged to the minimum, that is very beneficial to you.
Piggybacking on someone’s credit to earn a credit score can take you far but the most vital thing to do is having good credit behaviors and borrowing responsibly. After a while, it will work to your advantage. So, talk to your parents or friends to see the way forward.