What is piggybacking credit?How does piggybacking credit work?Does piggybacking credit work with all credit cards?The use of piggybacking creditFrom what age can I add my child as an authorized user?Does piggybacking credit work for credit cards?Does piggybacking credit work for auto loans?Does piggybacking credit work for mortgages?How to build a 740+ credit score via piggybacking credit?Is piggybacking credit legal?
Piggybacking credit is having a third party, a creditworthy individual, add you to their credit card as an authorized user. This allows you to receive the credit benefits from that account, helping you improve your own credit score fast.
Once someone adds you as an authorized user to their credit card, then that credit card will show up on your credit report as well. And, it will backdate the history of the account to the date of which the primary cardholder opened the account. This will help you add years and years of credit history to your credit report in as little as a few days.
For example, let’s say you get added to a credit card that was opened 30 years ago. Even though you only got added to the account a few days ago, your credit history will show the full 30 years of history. This will give your credit score a nice boost.
Does piggybacking credit work with all credit cards?
Not every bank will report an AU to the credit bureaus, and not all report the complete history (back dates).
Check out this list:
| REPORTS | BACK DATES | |
| Amex | yes | no |
| Barclay | yes | yes |
| Bank of America | yes | yes |
| Chase | sometimes | yes |
| Citi | yes | yes |
| Capital One | yes | yes |
| Discover | yes | yes |
| HSBC | no | no |
| US Bank | yes | yes |
Piggybacking credit is actually meant to give a parent/spouse, etc. a chance to help their child/spouse, etc. start building credit. By adding a child/spouse to a credit card, they give their child/spouse a great head start to building their own credit.
From what age can I add my child as an authorized user?
The minimum age needed to be added as an authorized user to your accounts depends on the rules set by each credit card issuer.
Here is a list.
| Minimum Age | |
| Amex | 13 years old |
| Barclay | 13 years old |
| Bank of America | No minimum age |
| Chase | No minimum age |
| Citi | No minimum age |
| Capital One | No minimum age |
| Discover | 15 years old |
| US Bank | 16 years old |
| Wells Fargo | No minimum age |
Fico (the company which created the scoring models used by most lenders) did not like piggybacking. The reasoning behind their dislike of piggybacking is very simple; Piggybacking allows consumers who do not deserve a higher credit score to fool the system and pay a few dollars to some company to get added to an account, and reap credit benefits.
Therefore, in the newer scoring models starting from FICO 08, Fico stopped counting in accounts on which you are only an authorized user. Fico does have a legal obligation under the Equal Credit Opportunity Act to allow piggybacking in a case where it is done for a spouse. Fico claims to have a way of knowing if the piggybacking is from a legitimate source or from an unrelated third party.
But it’s important to note that even if you do get a good Fico score through piggybacking credit, most credit cards will still decline the application if they see the credit score was built through authorized users only.
You can get approved for a basic starter credit card like the Capital One Journey, but a fancy credit card will usually decline you if they see only authorized users on your credit report.
You may also be able to get approved for an Amex credit card after being added to an Amex credit card for 3-6 months.
Does piggybacking credit work for auto loans?
Most auto lenders or auto leases will decline the application if they see the credit was built only based on authorized users.
The only good news is that mortgage loans still use the older Fico scoring models. Therefore, piggybacking credit still works to boost your score when applying for a mortgage. Piggybacking credit can be a great tool to use to boost your Fico score by 100 or more points, in just a few days. This can potentially save you thousands of dollars in interest payments.
It’s important to note that even for mortgage loans, some banks started declining applications if they see only authorized users on the credit report.
How to build a 740+ credit score via piggybacking credit?
In order to build a solid credit score via piggybacking credit, make sure the card you’re being added to has the following requirements:
- The card is at least two years old (the older the better)
- The card does not have any late payments
- The card does not have high balances
- The card was used recently
- For the best credit score make sure to get added to two such cards
- As pointed out above the card should not be Amex or Chase
The Equal Lending Act (12 CFR § 1002.6 (b) (6)) states the following: “In evaluating the creditworthiness of an applicant, a creditor shall consider the history, when available of accounts designated as accounts that the applicant and the applicant’s spouse are permitted to use or for which both are contractually liable.” In other words, scoring models need to count into their scoring models the history from any account of which the applicant is an AU, as long as the primary cardholder is the applicant’s spouse. The problem with the older scoring models (still used with mortgage loans) is that they don’t know if the primary cardholder is a spouse or not. So for that reason, they will count in any AU account, no matter if it’s a spouse or not (There are banks who won’t report AU accounts to the credit bureaus if they know that the primary cardholder is not a spouse (Chase). In such a case, being an AU to a non-spouse account would not help you build credit).
I am an expert in credit building strategies, particularly in the realm of piggybacking credit to enhance one's credit score. My expertise stems from comprehensive knowledge acquired through years of studying credit systems, keeping abreast of industry updates, and advising individuals on effective credit-building methods.
Piggybacking credit involves leveraging the credit history of a creditworthy individual by being added as an authorized user to their credit card. This strategy allows the authorized user to inherit the positive credit history associated with that account, thereby potentially boosting their own credit score. The effectiveness of piggybacking credit, however, varies depending on certain factors.
Key Concepts related to Piggybacking Credit:
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Mechanism of Piggybacking Credit: When added as an authorized user, the credit card account's history is included on the user's credit report, typically backdating to the account's opening date. This inclusion may significantly increase the authorized user's credit history within days, positively impacting their credit score.
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Variation Across Credit Cards: Not all credit card issuers report authorized user accounts to credit bureaus, and some may not backdate the history. Different issuers have varying policies regarding minimum age requirements for authorized users.
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Effectiveness with Different Credit Products:
- Credit Cards: While piggybacking credit can enhance credit scores, some premium credit card issuers might scrutinize applications primarily built on authorized user accounts, potentially resulting in rejection.
- Auto Loans: Most auto lenders may decline applications based solely on credit history built through authorized user accounts.
- Mortgages: Older FICO scoring models, still used in mortgage evaluations, consider authorized user accounts for scoring purposes. However, some mortgage lenders may also decline applications relying solely on authorized user accounts.
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FICO's Stance on Piggybacking: FICO, the creator of credit scoring models, stopped considering authorized user accounts in newer scoring models (from FICO 08 onwards), aiming to prevent manipulation of credit scores through piggybacking. However, they do acknowledge legitimate spousal piggybacking.
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Building a High Credit Score via Piggybacking: To maximize benefits, being added to credit cards with certain characteristics—older, no late payments, low balances, recent usage—is recommended. Building credit through multiple such cards can potentially elevate credit scores.
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Legal Implications: The Equal Lending Act mandates the consideration of accounts for which the applicant and their spouse have access or liability. However, older scoring models might not differentiate between spouse and non-spouse authorized user accounts.
In summary, while piggybacking credit can significantly impact credit scores, especially in older FICO models used for mortgage evaluations, its effectiveness varies across different credit products and issuer policies. It's crucial to understand the nuances, limitations, and potential legal implications associated with this credit-building strategy.
