What Is Piggybacking to Buy Credit?

A person's credit score is perhaps the main measure of his creditworthiness. This score is a measurement of the likelihood that someone with debts will repay them in the future. The credit score is compiled by credit bureaus as a way of helping lenders decide which customers will receive loans. Some people have sought to boost their credit ratings by piggybacking on the good credit scores of others.

Credit Score

A person's credit score is determined in large part by his current and past debts. If a person repaid debts on time in the past, he is likely to have a good score. However, if he failed to pay what was owed, his score may have fallen, causing lenders to charge him higher rates of interest. Any person seeking credit or a loan has a financial incentive to maintain a higher score.

Piggybacking

In the past, credit-card companies allowed account holders to place other people on their credit accounts. The person added to the account was allowed to charge money on the credit card; when the debt was repaid, that person accrued the same positive benefit to his score. Even if the authorized user did not use the card, he still reaped the positive effects on his credit score.

Uses

Piggybacking was a common practice enjoyed by parents and their children. To build their children's credit scores, parents often added their kids to credit card accounts. When the parents paid off the balances, the points received on their credit scores were also reflected in the children's credit scores. Some businesses formed that were based on "leasing" the use of good credit scores to others by listing them on the same account.

Considerations

In 2007, the major credit-reporting bureaus saw that piggybacking was undermining the credit-scoring process, which is based on the estimation of an individual's likelihood of paying back his own debts -- not someone else's debts. Piggybacking prevented the companies from scoring people on their own merits. In 2007, the practice of piggybacking was effectively outlawed by the credit bureaus.