Piggybacking involves linking one person’s strong credit rating to another person’s weak credit rating.
By adding the latter as an authorized signer on the former’s credit cards, the weaker credit scores are pulled higher because of better payment histories and lower debt-to-limit ratios.
Recently, credit repair companies began paying people with good credit several hundred dollars monthly to “rent” their credit to people with poor credit scores.
The agencies charged the low credit scoring group up to $1,000 for the service, promising (and delivering) an increase to their FICO. Outed by Kenneth Harney in April and under pressure from credit scoring stakeholders, the practice will soon be halted.
Beginning in September, credit agencies will protect their scoring methods from gamers of the system.
There are no records documented how many people have abused piggybacking and credit scoring loopholes.
The change will negatively impact people that legitimately use authorized accounts, including children and spouses. There are an estimated 41 million people in that category.
There are also close to 2 million people that only have authorized accounts in their credit history. For these people, their credit history is about to go blank.
Can you ‘piggyback’ on a credit score?
Liz Pulliam Weston
MSN Money, June 18, 2007