PIGGYBACKING DEFINITIONS, FROM TEXT BOOK TO REALITY

28 May 2014

Piggybacking Definitions, from text book to reality.

If you found this page by searching “piggybacking definition” in Google, I bet you skipped over some of the dull, conventional posts that spare no chance to encourage you to escape from poor credit circumstances. You probably also got bored with the obvious definitions of using piggybacking tradelines to boost your credit score. Now, you just want to know how piggybacking your credit can help you.

Here are the most relevant and accurate definitions of piggybacking as it relates to credit and increasing credit scores:

 

After paying a fee, you are listed as an authorized user on someone else’s credit card, someone with a healthy credit rating. You don’t actually get to use the card, but the credit history of that card appears on your credit report, making it more attractive.

Brigitte Yuille

Bankrate.com

Piggybacking is the act of improving your credit score or rating by becoming an authorized user on someone else’s credit card. By doing this, you receive all the benefits of having good credit without actually having built any of the credit yourself. It is most often used by parents with their children or with spouses. For piggybacking to work, the “good credit” person must add the “bad credit” or “no credit” person as an authorized user, not the other way around.

CreditCards.com

Consequently, becoming an authorized user on an old account with a good payment history, may improve an individual’s credit score, potentially increasing access to credit or reducing borrowing costs.  As a result, the practice of “piggybacking credit” has developed.  In a piggybacking arrangement, an individual pays a fee to be added as an authorized user on an account to “rent” the account’s credit history.

Finance and Economics Discussion Series
Divisions of Research & Statistics and Monetary Affairs
Federal Reserve Board, Washington, D.C.

Matias B. Avery, Kenneth P. Brevoort, and Glenn B. Canner

To what do these piggybacking definitions apply?

The piggybacking definition is simple and obvious. You become an authorized user on a revolving account and your credit report will inherit the positive characteristics of that account. If that account is in good standing, your credit score could increase. However, the more important task in pursuing this avenue is not to concern yourself with the definition of piggybacking, but instead, determine the application of piggybacking.

More specifically, you cannot piggyback on the following accounts:

  • Auto Loans
  • Primary Tradelines
  • Mortgages
  • Other

I quoted a quasi-governmental agency (the federal reserve) in this blog post for a reason. You should read the paper linked above. They specifically spell out the origins of piggybacking credit; the law. Under no circumstances could a reasonable person apply the law to accounts other than revolving credit cards. Next time someone suggests others, show them the Fed’s study.

Two things to note:

  1. Being an authorized user to an account that is not in good standing will hurt your credit score – so be very careful in who you choose to use as a primary account holder. It is often better to use a company that vets the cardholders. This ensures that all accounts are in good standing.
  2. It is not always beneficial to add tradelines. Recent negative items (late payments, collections, charge-offs, etc) can inhibit the tradeline from benefiting your credit score.
  3. Once again, tradelines don’t always raise your score. Tradelines with inappropriate sizes and ages can actually lower your score. We provide a free credit report analysis and recommendation to help you determine what tradelines will be best for you!

Updated: November 12, 2021

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