Wait, Why is This Called Piggybacking?

 

Just what is the origin of piggy back ride as far as we have come to know it? Well, a long time ago, think 16th century, people would carry a bag on their back called a “pick pack,” because you could pick it up and put it on your back. The Pick Pack eventually got called a “pick-a-pack” and that eventually became “pick-i-pack” and that eventually became “piggyback,” which now refers to the practice of someone jumping on your back and going for a ride, hence “piggyback ride.” The term refers to something fun and playful done between humans, and actually doesn’t have anything to do with those oinky pachiderms we all know and love. Language is weird folks; the piggy back ride origin story is one of thousands of strange little snippets. And what does this have to do with credit, you may ask?

What is credit piggy backing?

Just like a person may give someone a piggyback ride by carrying them on their back, so a person with poor or no FICO score can piggy back credit by being added as an Authorized User onto the card of someone with excellent credit. And when you get right down to it, a person doesn’t even need to have a great credit score to use their cards for this method, they just need to have perfect payment history and keep their utilization low. But, let’s be honest, if someone does have great credit habits, then their score is likely indicative of that. They’ll have a great FICO score and a great piggybacking credit score because they aren’t any different. Also, if someone with great credit cards does somehow lose their great credit score, the companies who have given that someone great credit cards will eventually see that through random spot checks and adjust the limit (or cancel the card) accordingly. But let’s leave that aside. Is there a difference between your real score and the piggyback credit score you achieve from utilizing this practice? No, there is not. That is because no institution can see what the score of someone is without that AU. Now, you do need to be a bit smart here. If you go to a lender and have a poor score, but then get an AU or two (or three) and then come back they might say “hmmm, something odd here,” but that is only the most conservative (read smaller) lenders, because let’s face it, if you go to a car dealership and you can cash-flow a loan and your score warrants the sale, they will sell you a car, every time, so, ultimately, there’s no reason to worry about piggybacking credit scores to improve your chances of getting approvals. So, you can piggyback on your friends and relatives, or you can utilize credit repair companies that use piggyback methods.

There are credit piggybacking companies?

You find a need for just about anything these days, and someone somewhere will be able to satisfy that need. If you find a need that a whole lotta people have, and you have a viable solution, well then you’ve got the impetus for a business. That’s capitalism folks. There aren’t a ton of piggyback credit companies, but there’s more than a few. These companies, like the one whose site you are on right now, utilize a method that they would prefer the banks not look too hard at. There isn’t anything illegal going on, but the banks don’t like it. They could make changes to streamline or prevent piggybacking, but the truth is, the more AU’s a person has on their cards, the more chance of racking up debts banks can charge interest on. Banks are greedy. Again, that’s capitalism. But you’ll never representatives from piggybacking credit companies on any major news station. It’s an “in the know” kind of thing. Piggybacking is also another way to say use tradelines, and the people who know what tradelines can do have the power to turn a low credit score into a good or great score faster than the people in the “normal” part of the credit industry think possible. And the best part? It’s cheap for what you get. Maybe not piggy back credit for cheap $100 cheap, but it will cut months, even years off the time it usually takes to get a good credit score.

Is “piggybacking” legal?

A few years ago, the creators of the FICO credit scoring system announced that they would stop including authorized users in the latest version of their FICO 08 scoring model which essentially will place an end to “piggybacking”. The monopoly of credit reporting i.e. Transunion, Equifax and Experian did not consider the Equal Credit Opportunity Act also referred to as Regulation B. They later reversed their decision since it would be incompliant with ECOA and here is what experts have to say:

“Fair Isaac, following the recommendation of the FTC counsel, admitted that it would be illegal to ignore authorized user credit histories as a part of the FICO score calculation.”

Steve Cypher, Reporter – www.autocreditexpress.com

 

“Fair Isaac Corp., creator of the well-known FICO credit score, had announced last year it would end the practice…” of piggybacking “…but during Congressional testimony Tuesday, acknowledged it had changed its mind”

Jeremy M. Simon, Staff Reporter – www.credit.com

 

“This is possible because creditors generally have followed a practice of furnishing to credit bureaus information about all authorized users, whether or not theauthorized user is a spouse, without indicating which authorized users are spouses and which are not. This practice does not violate Reg. B”

Robert B. Avery, Kenneth P. Brevoort, and Glenn B. Canner – Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.

 

“After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on thecredit report”

Thomas J. Quinn – Vice President of Scoring Solutions, Fair Isaac Corp.