Credit Bureaus End Piggybacking

By: Ronnica Rothe

Starting in September 2007, credit bureaus will eliminate "piggybacking." Those seeking to improve their credit will have to revert to using traditional methods.

The practice called piggybacking was used by those who wanted a quick way to increase their credit score. They would rely on someone with good credit to make them an authorized user on their account. This would allow the person to add that credit history to their own, boosting their score. The person who was essentially leasing out their credit would not suffer because the newly authorized card would be given to them and immediately destroyed. The one needed their credit boost would pay a fee, usually to a company would made the arrangements between the individuals which would pass on a portion of the fee to the person with good credit.

Though this practice had been legal, it was a way to gain credit history that was in fact not yours. It would give any potential creditors a false impression of what your true credit history was. This led to an increasing number of foreclosures by those who would not have otherwise qualified for the mortgage if they had not piggybacked on someone else's credit.

Since the Fair Isaac and Co. (FICO) will now be shutting down this practice, those who want to improve their credit history will have to find other legal methods to do so. By obtaining a free copy of your credit report online, you can review it for any errors. If you find errors, dispute these with the credit bureaus themselves. By making sure your credit history is correct, you avoid potential problems when applying for a credit card, car loan, or mortgage.

Another way to improve your credit history is by getting current on all your credit cards. If at all possible, reduce the balances that you carry on these credit cards as much as possible. Your credit will improve as you lower your debt level more and more.

If you were someone who wanted to piggyback on another's credit, do some research on what options are available to improve your credit and lower your debt or talk to a credit counselor to help you sort through them. They can help you find ways to pay down your debt and improve your credit and chose the right option for you.

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