If you’ve ever tried to check your credit and come away discouraged because you didn’t have a credit report or it didn’t have enough data to generate a credit score, you might be looking for a shortcut to building credit.
Becoming an authorized user on someone else’s credit card — often called piggybacking because you’re riding on the strength of the primary cardholder’s good credit — might help.
Credit piggybacking is likelier to be useful if your problem is thin credit rather than damaged credit. (If you’ve had problems staying on top of bills, check into restoring your credit instead of piggybacking.)
It used to be that piggybacking meant asking your parents, or maybe an aunt whose money smarts you respected, to add you as an authorized user to a credit card. That card’s payment history then became part of your own credit report. So, even if you were 19 years old and couldn’t qualify for credit on your own, you could have a credit card — possibly one that’s older than you.
You might use the card for emergencies (probably what your parent intended). Or you could have a “learning experience” by running up some charges and having to set things straight with the primary cardholder. Either way, it should help you learn about the responsible use of credit.
The primary user’s credit history can help you even if you don’t use the card (or even have it in your possession), just as long as the card reports authorized users to the credit bureaus.
Now there’s a newer kind of credit piggybacking. An internet search can show you companies that will pair you up with strangers — strangers with verifiably excellent credit histories — who will add you to their cards for a couple of months, for a fee.
That person’s credit line appears on your credit report during that time, potentially inflating your score. That gives you a window of opportunity to qualify for a credit product on your own. (And yes, it’s legal; there is no law against charging someone to add them as an authorized user.) You don’t get a physical card, though, and you can’t charge anything to the account.
Piggybacking on a stranger’s card can cost you big money — often more than $1,000 if you are looking to get on an old account with a high credit limit. You’ll have to share your full legal name, Social Security number and date of birth with that person in order to be added. And there is no guarantee you’ll receive the loan or other credit product you’re seeking.
After your paid piggybacking term is up, you’ll be removed as an authorized user and you’ll lose the credit-boosting effect. Your score will revert to where it was, unless you’ve taken other actions that might have lifted or lowered your credit standing.
Do we recommend paid credit piggybacking? In a word, no.
“It may be legal, but the ethics of it are certainly questionable,” says NerdWallet columnist Liz Weston. “This is very different from adding a spouse or child as an authorized user, which can help them build credit over the long term.”
“If I added another person as an authorized user to one of my accounts, I would feel a duty to help educate that person about responsible credit use,” Weston says. “I wouldn’t do it just to help them score a loan approval or a better interest rate than they’ve earned on their own.”
Build up your own credit
If you decide to use authorized user status to boost your credit, ask a trusted family member with excellent credit to add you. Then, ask that person to teach you the habits that earned the high credit standing. You’ll benefit from both the shared credit history and the advice.
But establishing your own good credit should be your ultimate goal. You can build credit with a secured credit card or a credit-builder loan. It should take about six months of paying bills on time, every time to get established.
Nothing is more important than paying on time. Payment history has a major influence on credit scores, so a mistake there can have a long-term impact. Keeping balances low relative to your credit limit is also important, but the effect of a high balance vanishes as soon as credit bureaus report that you’ve paid it down.
Practicing good credit habits will lead to lower-cost borrowing and better credit card rewards. And that’s not a temporary fix.
Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @BeverlyOShea.