Piggybacking is still an option, but proceed with caution

Question for the CreditCards.com expert

Dear Credit Score Report,
My husband and I are trying to build/rebuild our credit and were wondering if "piggybacking" is still an option. We have read several places that FICO no longer recognizes it. -- Jessica

Answer for the CreditCards.com expert

Hey Jessica,
If you're looking to help boost a credit score, piggybacking as an authorized user on a spouse's credit card account remains an option.

Assuming the primary credit cardholder has a solid account history -- with a record of on time-payments and low balances, for example -- the other spouse can benefit from being added to that credit card as an authorized user, also known as piggybacking. However, Jessica, those articles you read weren't exactly wrong when they said FICO no longer recognizes piggybacking. That's because while earlier versions of its scoring model (which are still used by most lenders) allow for all types of piggybacking, FICO's newest scoring model differentiates between authorized account sharing and a second, somewhat shady form of piggybacking where consumers pay to become authorized users on a stranger's credit card.

"If we're talking about piggybacking in terms of the buying and selling of trade lines to improve one's score, FICO doesn't recommend that or recognize it in the newest FICO scoring model, FICO 8," says Barry Paperno, consumer operations manager for myFICO.com.

Just as prior versions did, FICO 8 -- introduced in 2009 and previously known as "FICO 08" -- allows consumers to benefit from their status as authorized account users. "The [authorized] account will appear on your credit report and will be treated no differently by the FICO scoring formula than any other accounts that appear on your report," Paperno says. That can help the authorized user's FICO score when the primary cardholder has a lengthy, positive credit history. Of course, if both you and your husband have poor credit histories -- too many late payments or maxed-out cards, for example -- adding the other spouse as an authorized user probably won't help your FICO scores.

Faced with that situation, some consumers will pay questionable "credit repair" companies that charge borrowers for the opportunity to piggyback on a stranger's superior credit history. While that method differs significantly from helping a child or spouse, the goal of both piggybacking approaches is the same: to improve the authorized user's credit history without hurting the primary cardholder's credit. Earlier FICO scoring models included both types when calculating a credit score until lenders became worried about the growth of "pay to piggyback" credit repair schemes. FICO 8 was designed to address lenders' concerns, while still permitting family members' FICO scores to reflect their status as authorized users.

In addition to being ethically questionable, paying to piggyback is also a legal gray area. "This is one of those questions for which there is no black and white answer," says Chi Chi Wu, staff attorney for the Boston-based National Consumer Law Center. "There is nothing explicitly illegal about it, but I think some lenders feel like it is a form of misrepresentation."

So how can FICO tell whether someone is a legitimate authorized user or a piggybacking payer? The latest scoring model "will look for certain patterns that are typical for illegitimate authorized user accounts," Paperno says, although FICO -- protective of its proprietary model -- won't say just what those patterns are. Once identified, however, those accounts won't be counted toward the calculation of your FICO score.

Still, despite FICO's innovation, those earlier scoring models remain more widely used. That could eventually change, of course, as banks increasingly rely on FICO 8. However, lenders can be slow to change, so movement toward new scoring models will likely proceed at a glacial pace.

Rather than concern yourself over which FICO model each individual lender is using, Jessica, my advice for you is to play it safe: Have the spouse with the weaker credit history added as an authorized user on the other's account. Meanwhile, continue to keep all account balances low, pay your bills on time and take on new credit only when necessary.  

After all, you want to stay on the credit industry's good side, since it's their approval that's required for mortgages, credit cards and other types of loans.  

Good luck!

-- Jeremy

See related: Help for bad credit, Long-awaited credit scoring revisions unveiled, Piggybacking gets clemency from FICO, Cardholders' mistakes can bring down authorized users' credit score, The good guys of credit repair, Piggybacking, meant to jump-start credit, can backfire 

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Updated: 12-11-2018