When applying for a loan, lenders must assess the likelihood of timely debt repayment by evaluating various factors, one of which is credit history. However, establishing a strong credit history can be challenging, as credit usage through credit cards and loans is necessary to do so.

Credit card piggybacking offers a solution, as it allows you to become an authorized user on another person’s credit card account and have it appear on your own credit report, allowing you to build credit without having to open your own account.

What Is Credit Card Piggybacking?

Credit card “piggybacking” refers to the process of becoming an authorized user on someone else’s credit card account. As an authorized user, you become a secondary account holder, which results in the account appearing in your credit report.

The main benefit of becoming an authorized user is the fact that you get to build credit without having to apply and open your own account, as well as make payments. With that said, however, “piggybacking” on someone else’s account does come with its fair share of disadvantages.

For one, delinquencies on the account, such as missed or late payments, will hurt your personal credit. As an authorized user, you’re not liable to make payments toward the account’s debt. But because the credit card appears on your credit report as your own, so too will negative information.

Credit Card Piggybacking Doesn’t Always Work

Yes, credit card piggybacking can be an effective way to artificially build credit. But because you’re relying on someone else to build your credit for you, credit card piggybacking doesn’t help you learn and develop good credit habits, which are invaluable.

The popularity of credit card piggybacking has also reduced its effectiveness in helping build credit. For one, the trend has given birth to many third-party companies that aim to take advantage of consumers by selling questionable piggybacking services at high prices.

It;’s also worth noting that some credit-scoring companies are now developing ways to downplay the effect of authorized-user accounts on one’s credit history. In fact, newer credit-scoring algorithms now ignore piggybacked accounts entirely when calculating credit scores.

How To Build Credit Naturally

In some cases, credit card piggybacking can be an option to consider. In the long run, however, it’s better if you take steps to build your credit naturally. Fortunately, there are many ways to do this, including:

• Applying for a credit-builder loan. Credit-builder loans are designed to help you establish a payment history. Unlike traditional loans, credit-builder loans generally don’t have credit requirements, making them easy to get.

• Getting a secured credit card. You’ll find it difficult to qualify for an unsecured credit card if you have a low credit score or a short credit history. However, you can easily get a secured credit card for as low as $200 without needing to meet credit requirements.

• Asking someone to cosign. A cosigner is someone who’ll accept to share payment obligations to a debt. Having a guarantor reduces lender risk and may allow you to qualify for a loan you wouldn’t qualify for on your own.

• Reporting non-credit bill payments. Traditionally, only credit-related payments, such as credit card and loan payments, influenced your credit. Today, however, you can use non-credit bill payments like rent to build credit by using a service, such as UltraFICO or Experian Boost.

• Keeping your accounts active. The length of your credit history tells lenders how long you’ve been using credit, as well as how well you managed credit during that time. The older your accounts get, the better “fatter” your credit history gets.

The Bottom Line

Credit card piggybacking can undoubtedly help you build credit. However, this practice isn’t foolproof, considering that you’re leaving your credit in the hands of another person’s account, as well as the fact that credit-scoring companies may even choose to ignore it as part of your credit history.

Fortunately, there are many other ways to build your credit without relying on artificial means. One of these is credit repair, the process of removing negative information from your credit report. Call us at 888-799-7267 to schedule a Free Credit Consultation.