How Credit Card Piggybacking Works (2024)

Whether you’re looking to purchase a home or you want to qualify for a lower rate car loan, there is a little-known method to boost your credit score: piggybacking. While this method can give your credit a substantial boost, it has some caveats you should be aware of.

What Is Piggybacking?

Piggybacking is when someone becomes an authorized user on another person’s credit card for the purpose of boosting their credit score. This is not to be confused with being a joint account holder. The difference between the two is that authorized users are not legally responsible for charges made on the credit card, whereas joint account holders are.

However, the authorized user gets the full account history reflected on their credit report. They will get credit characteristics such as the payment history, the age of the account and the utilization rate. When these characteristics are positive, they can help to raise an authorized user’s credit score. If they are not positive, however, the authorized user risks lowering their own score.

There are two ways you can piggyback off someone else’s credit: get someone close to you to share their credit rating or rent it from a stranger for a fee—a controversial practice and one we do not recommend.

Person-to-Person Piggybacking

A family member, friend or a significant other with excellent credit may be willing to share their good reputation with you. That person would contact their credit card issuer and add you on as an authorized user. You could choose to get a card for the account or not.

If you do get a card, you’ll have certain privileges. For example, authorized userson many Citibank credit cards can make charges on the account and make payments, along with having online access, but they can’t increase the credit line or request a lower APR.

Couples and young adults on their parent’s credit cards can and do regularly take advantage of this benefit. If you are trying this for the first time, be careful to choose the right person at the right time. If you become an authorized user and there’s a rift in the relationship or the primary cardholder falls on hard times and starts missing payments, the piggybacking could have an unintended negative result.

For-Profit Piggybacking

If you can’t find credit refuge from your family and friends, you can turn to tradeline credit repair companies. For a fee, a company will match you with a cardholder who has great credit and add you to the person’s credit card. The cardholder gets a piece of the fee you pay and you will not receive an actual card.

These piggybacking companies, which started to emerge in 2007, are controversial. Credit rating agencies like Fair Isaacs Corp. (FICO) say these companies mislead consumers about how much they can help raise scores. Moreover, FICO says it has enhanced its scoring formulas “to protect both scores and lenders from potential gaming by this type of piggybacking”—in other words, to make paid piggybacking less effective.

Tradeline credit repair companies aren’t technically violating laws by facilitating piggybacking, but legal implications could still arise for you—if you are perceived as deceiving the bank, you could be charged with fraud.

There are other risks beyond legality, though. You are renting credit from a stranger who is looking to make a profit off their great credit score and you are using a for-profit business as an intermediary to do it. In these situations, you’re giving a great deal of trust to an organization and a person that might not have your best interest in mind.

How Does Piggybacking Work?

To understand how and why piggybacking works, you need to know the basics of credit scores. Your credit score is affected by your payment history, how much of your available credit you’re using (known as your credit utilization), the length of your credit history, whether you’ve recently received new credit and your credit mix. Basically, it’s a rating of how you’ve managed your debt.

When you become an authorized user, a few things happen. The account will show up on your credit file, but there will be an indication for future lenders that you are an authorized user. Second, your overall credit limit increases, which could lower your credit utilization ratio if the balance on the card you are piggybacking onto is kept low. Third, it changes the length of your credit history.

Depending on how long the account has been open, you might increase the length of your credit history or shorten it. A longer credit history is a positive because it means you have more experience in managing credit. Fourth, you get the cardholder’s (presumably) good record of on-time payments added to your credit report.

Piggybacking legally exists because of the serious obstacles women faced, decades ago, to getting their own credit cards or establishing independent credit histories when they used (and helped pay off) cards issued to their husbands as the primary cardholder. In 1974, Congress passed the Equal Credit Opportunity Act making it unlawful for creditors to discriminate on the basis of race, religion, sex or marital status. To implement that law, the Federal Reserve issued Regulation B.

Among other things, Reg B requires creditors to report authorized users who are spouses of a cardholder to credit reporting companies and to consider the history from joint and authorized user accounts when making a credit decision for either spouse.

There’s a significant loophole, though. When reporting an authorized user, creditors don’t specify whether that user is actually the spouse of the cardholder. This allows an authorized user to be a child, a cousin, a friend, a significant other and, in the case of for-profit credit repair organizations, a stranger and still benefit from authorized user status.

Does Piggybacking Really Work?

A 2010 Federal Reserve study found that thin credit files (meaning those with few accounts reporting) had one of the largest score improvements from piggybacking, with score gains averaging between 45 and 64 points. Individuals with a short credit history such as two years or less also had a large score increase. Their average score increase was 22 points. There’s significant benefits if you fall in either of those categories or if your current score qualifies you as a subprime borrower.

While it can help some people, piggybacking depends on the credit card company. Not all credit card issuers will be helpful. Regulation B specifies that banks must report authorized users who are spouses; so piggybacking depends on whether a bank also reports authorized users who are not spouses. Some banks will give you a choice, offering to not report account activity on an authorized user’s credit file if they are not the account holder’s spouse.

Confirm how your credit card issuer treats authorized users by asking which credit reporting bureaus it reports authorized users to and what type of activity it will report.

Who Can Benefit From Piggybacking?

Piggybacking might be a good tool for someone who hasn’t built their credit history and needs a boost. Building credit takes time and by piggybacking off someone with an established credit history, you can improve your credit score much faster.

It can work out well if you do it with the support of a trusted family member or friend. Even so, there might be a negative impact on your credit score if your benefactor incurs debt or decides to drop you as an authorized user prematurely. In both scenarios, your credit might be negatively impacted due to something out of your control.

What Are the Risks of Piggybacking?

The risks for the account owner depend on whether the authorized user will have access to a card to make purchases on the account. Whatever your private agreement, the account owner is legally responsible for paying for all purchases by an authorized user.

If you do want to give a relative or friend access to your account to help boost their credit score, here’s a few ways to help protect yourself:

• Monitor the authorized user’s credit score. Once the person’s score increases, you can remove them from your account.
• Lower the credit limit on the authorized user card. This prevents an authorized user from running up to much debt on your account.

There’s a risk to authorized users, too, since they are reliant on the account owners’ responsible activity to boost their scores. If a card owner spends to their limit or misses a payment, that will negatively affect both the authorized user and the owner’s score.

Should You Use Piggybacking To Boost Your Credit Score?

Piggybacking can be a good credit boosting method for individuals with thin credit files or low scores. It’s also useful for people who don’t trust themselves to build their own credit rating with a credit card.

This technique won’t do much for someone who already has favorable credit. The interest rates that they might receive won’t improve significantly since they were low credit risks to begin with.

If you’re considering piggybacking, you may want to try improving your score in other ways first.