Credit piggy backing gets bucked

Posted by Joe on February 5th, 2008

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Here at NextAdvisor we have been involved with the credit report and monitoring business for some time and have seen many solutions that purport to be miracle cures for low credit scores. One of the most popular techniques over the last few years has been so called “credit piggy backing” where companies will connect consumers with low credit scores with consumers with higher credit scores.

The high score consumers will add the low score consumer to one or more of their existing credit accounts as an “authorized user” for a fee. The idea is that some of the positive credit history from the high score will be transferred to the lower score. The principle is not unlike how a parent may add one of their children to an existing credit account or co-sign a loan for them to help them kick start their credit profile. The difference with credit piggy backing is that the two individuals involved don’t know each other at all.

Lenders and credit bureaus have identified this loop hole and are taking steps to eradicate it. FICO announced last summer that they would be taking steps to remove any positive impact of “authorized user” credit from credit scores. This change will be retroactive and FICO estimates that about 25% of credit scores will be impacted.

We firmly believe that the best way to improve credit scores is to adopt healthy credit habits. The first step is to learn about the contents of your credit report buy signing up for a credit report and monitoring service. You can read more about credit report services by reading our free online credit report guide.

• Equifax offers free 3-in-1 credit report and 3 bureau credit report monitoring
• Unlimited credit reports and scores from all 3 bureaus with CreditCheck Total
• How does your state credit score rate?
• FreeCreditReport.com offers 30 day trial of the cheapest three bureau credit monitoring service
• Reader Question: Which credit report monitoring services provide ongoing credit report and score data?