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To Her Credit

The case against credit card piggybacking

Summary

The odds of something going wrong are high and it’s better to let others build their own good credit habits

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Question

Dear Sally,
My question is about piggybacking. How does piggybacking affect the person who is letting the piggybacker be added to their credit report? I need to know both potential negative and positive results. – Taia

Answer

Dear Taia,
Piggybacking, or adding someone as an authorized user to a credit card account for the purpose of raising the added person’s credit score or helping someone establish credit, can indeed affect the cardholder who allows it. It’s not in the way some people think, however. If the new authorized user (the piggybacker) has a spotty credit history, that history does not somehow work its way onto the primary cardholder’s history. The only history the piggybacker and the cardholder will have in common is from the one card.

If you are considering adding someone to one of your cards as an authorized user, your credit and finances are most likely to be adversely affected because that person is actually allowed to use a card that is linked to your account.

A person may have the best intentions by simply being put on your card to raise his or her credit score. Unfortunately, the fact that they need to use your account’s good history instead of building their own from scratch tells me that this person is either inexperienced with handling credit, or he or she has not been very good at it in the past.

Too many times, I’ve seen problems with authorized users to think it is a good idea. I’d especially discourage you from adding a romantic interest to your account. Unlike most relationships with friends or relatives, a relationship with a boyfriend or girlfriend tends to really be over when it’s over. Any financial entanglements get messy fast. Just say no.

Also, say no to friends. Letting someone use your credit card is essentially giving them a loan, and lending money to people doesn’t generally turn out well. You’re likely to lose both your money and your friends.

If it’s your child who wants to be added to your account, it depends on the maturity level and trustworthiness of your child. I still wouldn’t give a child, even a responsible young adult child, access to a credit card account with a higher balance than I could comfortably pay off if something went wrong. Even the best of kids can be startled to discover how fast a few charges add up on a credit card bill. I remember that hard lesson myself!

Even if the person you add to your account uses the credit card responsibly and pays you back for every purchase, your debt-to-available credit ratio can be affected by the amount of debt on your card. This can lower your score, even if you pay it off every month.

The only way to prevent a piggybacking arrangement from backfiring is if you never give the authorized user access to the card. That way, the only person using the card account is you. It’s also important to know that if you mishandle the shared account, such as paying late or carrying large balances, your actions can hurt rather than help your guest’s credit.

Another reason I would avoid letting anyone be an authorized user on my credit card is that it’s almost always unnecessary. Unless someone suddenly needs to take out a mortgage to buy a house, and they had no clue until today that they would need a credit score to do that, they can afford to take their time building a score.

Piggybacking may seem like a good shortcut to a good credit score. In the long term, however, paying bills on time and proving you can handle credit are more surefire ways to a top credit score than hitching a ride on someone else’s card. Your friends or relatives should start building their own good credit history as soon as possible, and keep it up for the rest of their lives.

See related:5 questions every authorized user should ask, How to remove an authorized user from a credit card account

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