Is Credit Card Piggybacking A Good Way To Build Credit?

Building credit can be difficult. If you have no payment history, creditors will not be quick to lend you money. 

A credit card builder loan or a secured credit card can help you establish credit. However, you might also want to know about “piggybacking” credit. This is when you become an authorized user on another person’s credit card for the purpose of building your credit. 

This strategy might not work because some credit card issuers do not report the activities of an authorized user to credit bureaus. 

If you are completely new to credit, your first piggybacking option is a significant other, close friend or a parent who is financially responsible. Sometimes, however, you do not have these options; then what?

Over the past few years, credit piggybacking services have come up. When you apply for these services, you will be made an authorized user on a stranger’s credit card at a fee. 

So what should you opt for?

Does Piggybacking Credit Help Your Score?

In most cases, piggybacking will not go according to plan but it can boot your credit a little. 

Your credit card activity as an authorized user may not appear on your credit reports

You may be disappointed to learn that some credit card companies will not report your activities and if they do, it will be in an unpredictable way. 

Sometimes, your positive history will go to the original cardholder’s report and not your own. If you do not want to face any of these frustrations, consult the credit card company and see if and how they report your activity. 

An irresponsible cardholder may harm your score

Many people will not easily make you an authorized user on their card. What if your irresponsible financial habits damage their score? 

However, you also need to be choosy. If the cardholder pays their bills on time and has low credit card utilization, your credit will be positively affected. If their irresponsible spending negatively impacts your score, you can ask the credit card issuer to take your name off the account and request the bureaus to remove the account from your report. 

Types of Credit Piggybacking

Traditional Piggybacking

With this type of piggybacking, you talk to a trusted relative or friend and ask them to make you an authorized user on their credit card. Their credit card’s payment history will start to appear on your reports. You might not even have to use the card yourself for this to work. 

For-profit Piggybacking

There are companies that can help you piggyback on another person’s card. The two people being paired up are usually strangers and you have to pay a fee.

This type of piggybacking can be risky. It is wise to be added only if you trust the account holder; except it is not easy to trust a stranger.

The Risks Of For-profit Piggybacking

Is it worth it? FICO discourages this type of piggybacking. The FICO Score 8 model reduces the benefits of tradeline renting. 

For-profit piggybacking could also make you an easy target for ID theft because when applying, you have to disclose much of your personal information.