Few things are more devastating than being denied a new credit card or a loan, particularly when you really need the money. Perhaps you’d like to buy a new house when you find out you’re expecting twins, and you have a two-bedroom home and one child already. You know it’s not ideal, and you want a bigger house. You can afford it, but your credit history is so bad you’re denied a loan. It happens all the time in various cases, and it’s devastating. While you have all the power to repair your bad credit, it takes time. It takes months of on-time payments, years of debt repayment, and sometimes years for bad credit items to fall off your report to improve your score.
Most consumers haven’t that kind of time to wait to see their credit report increase, and they want to know if the newfound trend of buying new credit is legal and effective. If you’ve never heard of it, it’s something called piggybacking, and it’s not always a positive thing to do. You can do it legally, but there are some questions as to how well it works and whether it’s moral or ethical to do it. Piggybacking is an interesting concept, and it’s worth looking into to get to know what it’s all about.
Piggybacking is a fancy term for borrowing the credit of someone with a much better score than you. You can piggyback on someone else’s credit by being added to their accounts as an authorized user. If you know someone who has a great credit score, you can ask them to add you as an authorized user to their accounts and watch your credit score go up. It works for many, because you can forgo actually taking the authorized card you’re issued. You can promise a friend or family that all you want is for them to add you, but they can keep the card and you’ll never use their credit to make any purchases.
Companies Selling Better Credit
Did you know there are companies all over the internet working on the piggybacking game? They offer consumers with bad credit a chance to piggyback onto someone with a great score and raise their score quickly, and they do it for a fee. They might charge several hundred dollars or more depending on the low score you carry, but the possibility of better credit is worth it to many consumers.
The company works to find those who have good credit, and they pay them a small fee to allow consumer with poor credit to piggyback on their accounts as an authorized user. It’s not illegal, but it’s questionable.
Piggybacking isn’t illegal. You won’t go to jail for partaking in this business, but it’s not ethical. The reason is because it’s lying. You are buying someone else’s good credit to use as your own, and lenders become more likely to give you good loans, low rates, and more money. Since you have questionable credit of your own, they have no idea that your credit isn’t good enough for a loan since someone else’s good credit is what you’re using. You’re lying to creditors and lenders by making it look like you’re good at repaying your debts when you might be anything but.
Since you’ve defaulted, stopped paying, made late payments, or missed payments on your own accounts, you’re more likely to do the same. Lenders lose money and their businesses are at risk. This is not a moral or ethical thing to do, but many people do it.
Things to Consider
When you piggyback, you provide someone else your credit information and Social Security Number. You might assume since you have bad credit, the person whose credit score you’re now borrowing can’t steal your identity. It might be true, but what happens when you spend time repairing your credit and have a higher score? That person now has your personal information and the opportunity to steal your identity anytime they want.
You’re paying a company to provide your personal information to a total stranger, and there’s nothing safe or secure about that. In a society where identity theft is so prevalent, it’s dangerous to provide this information to anyone else. Don’t do it.
Another consideration is piggybacking is far less effective now than it was in the past. Prior to 2008, many people used it as a method of securing loans they couldn’t afford. It became a major player in the crash of the economy, and people were unable to pay their loans back as a result.
If you want to improve your credit, do it the right way. Spend that money paying off your debts. Don’t make late payments. Sign up for automatic payments so this doesn’t become a problem. You can do that without much stress, and you can get your bills paid on time. Lower the amount of credit you utilize and make sure your credit score is made better each time you pay a bill or buy something you can afford. Your job is to make sure your credit is excellent, and you can do that without adding too much stress to your life simply by focusing on the legal and ethical way of improving your credit score.