Piggybacking Credit - Don't Get Taken For A Ride

We've all heard the ads - "Increase your credit score in 30 days or less!" - companies promising to bolster your credit score into the 700's so you can get better rates on your loans or credit cards. How do they work this magic when it takes the rest of us months to clean up our credit?

The process they use is called "credit piggybacking". For a fee (usually in the thousands of dollars) they will match you up with someone with excellent credit who will then place you on one of their credit cards as an "authorized user". You don't get to use the other person's card. In fact, you often don't even get the card. What you do get is to "piggyback" on to part of their credit history. Their entire payment history for that account magically shows up on your credit report as if it were your own payment history. Because these "donors" have been screened to ensure their credit is excellent, their payment history serves to increase your overall credit score. If you buy enough of these accounts, it can really push your score up.

It's a great situation for everyone. You get an increase in your credit score, allowing you to get credit at a better rate. And the owner of the account and the company that matched you with the credit card holder gets to share in the fees you paid to have this done. Everyone is happy. Everyone, that is, except the bank when you apply for a new loan or credit card. For some reason, they seem to view this as credit fraud. And now it is going to stop.

FICO, the company that compiles credit scores for banks, is revamping the way scores are calculated. An "authorized user" account will no longer count when calculating your credit score. It won't hurt you, but it won't help you either. If you have been using an "authorized user" account to bolster your credit score, you may actually see your score decline, since this account will no longer be factored in to the calculation.

If you need to improve your credit, read Your Credit Rating - Know the Score. If someone offers you an "autorized users" account, don't take it. At best you'll be throwing out money on fees. At worst you'll be accused of credit fraud. This is one piggyback ride you can't afford to take.