Piggybacking–does it still work post FICO 08?
Several years ago I was on another one of my bad-credit-induced searches for ways to improve my FICO score. It was then when I first discovered the concept known as “piggybacking.”
Credit Piggybacking is essentially a matching service that connects people with a strong credit history, called “credit-lenders” to customers with poor credit scores who are willing to pay a price to boost their FICO score. The key to the piggybacking business is how authorized user accounts are incorporated into the FICO score calculation.
One company who sells these credit trade lines explains the method like this: “When one person is listed as an authorized user on someone else’s credit card- someone with a healthy credit rating. The authorized user does not typically use the card, know the account number, nor have access to any information about the primary user, but the credit history of that card appears on their credit report. When the new history appears in the authorized user’s credit reports, their credit score is immediately recalculated to show an increase as a result of the new card’s presence in the report.
While the authorized user does not receive the physical card or account number, they do receive the benefit of having that particular credit card’s entire credit history – limit, balance, payments – in essence “copied and pasted” onto their credit report, looking as though it were there the entire time. Having a higher FICO credit score means lower interest rates, easier loan approvals, higher credit limits and better terms for consumers.”
Being a critical thinker, I thought there must be a catch. So I started doing research on this phenomenon and soon found out that it was indeed a legitimate way of drastically increasing a person’s FICO score in very short period of time. I also found that this method had been around for awhile. In fact, by the time I found out about it the Fair Isaac Company- the company who created the FICO scoring system - was already in the process of changing their credit scoring algorithm to do away with piggybacking entirely. By the summer of 2007 the word was all over the Web that piggybacking would be a thing of the past by the end of the year.
Well, the end of ’07 came and went and credit repair companies were still advertising the use of authorized trade lines as a way to increase your credit score. I started checking credit repair blogs to see what people were saying and I got a mixed bag: some were saying au accounts were dead, others were saying they were still selling them successfully. This presented a major problem because I had no way of finding out who was right and who was wrong. And since purchasing a trade line or au account costs on average around 1500-2500 dollars I wasn’t about the take the risk without knowing the truth. With so much at stake, I was determined to get to the bottom of piggybacking so I started doing more research.
And a quick word about reading blogs to find information - please be aware that some of the opinions you read on a blog posted by an "average Joe" or even someone who might appear to know what they are talking about might be an "industry plant" getting paid by a large company in that particular industry to push public opinion in a direction that serves that company's best interest. Politics are everywhere - especially on blogs so don't believe everything you read. Do your own homework!
I soon found out that FICO 08 did not affect authorized user trade lines because the new Fair Isaac algorithm violated a section of the Equal Credit Opportunity Act. Fair Isaac’s president admitted this at a congressional hearing in July of 2008. But instead of revealing to this publicly, the Fair Isaac Company issued a press release indicating the exact opposite, thus starting all the internet rumors that piggybacking was no longer useful in increasing the FICO score.
Moreover, because of all the confusion regarding the new FICO algorithm, Experian, Equifax and Transunion decided to create their own credit scoring system to replace the embattled FICO. The new scoring system, “Vantage Score” was on its way to industry-wide acceptance until Fair Isaac brought a law suit against “the big three” for monopolizing their market share.
More recently, I found a 2012 report from the Federal Trade Commission that stated unequivocally that purchasing trade lines is legal. According to Fair Isaac, they claim to have come up with a system that can distinguish authentic authorized users from those “gaming the system” – purchasing au accounts simply to boost their credit score.
Piggybacking is, as of this writing, still a viable, legitimate and legal method of increasing your FICO score, however, be aware that Fair Isaac has released it’s updated algorithm and many companies already are using it to determine a person’s credit worthiness. That being said, I have found no information on the Internet that indicates the new algorithm has had any significant effect upon credit repair companies that claim to sell au accounts.
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