Marriage does not automatically merge credit files together. If, however, your husband has good credit and you have bad credit or no credit history, he can help raise your credit score through a practice known as piggybacking. Credit piggybacking may be a useful strategy for a couple wanting to make a major purchase that will require a joint application, such as a new house or car. The practice is not a cure-all for severe credit problems, however, so you should still try to repair your credit independently.
Credit Piggybacking
To piggyback on your husband's credit, you need him to call the creditor of his good-standing accounts and ask that you be added as an authorized user of the account. You can also piggyback when he first opens a credit card account. Most credit card applications allow you to add another person as an authorized user. He will need to supply your name, contact information, and social security number. By making you an authorized user, the positive credit listing would be added to your credit file. The history of good payments would be factored into your credit score.
Adding Authorized Users vs. Joint Accountholders
Spouses need to be careful about the category under which they add additional users of their credit cards. An authorized user of a credit card has the right to use the card but no obligation to pay it. In any case where the bill is not paid, only the primary cardholder is responsible. Your husband has the option of asking his creditors to convert a credit account into a joint credit account. This is a useful option if you want to be responsible for making payment and make decisions regarding the account. In this case, you become a co-borrower. The creditor will have you complete a new application and then examine both your credit histories. If you have a low credit score or no credit history, the creditor may offer you a joint account with a higher interest rate or lower credit limit to account for the credit risk.
Credit Scoring
Piggybacking generally improves your credit score because, according to the Fair Isaac Company (FICO) -- the company that produces the formula that calculates credit scores -- payment history is about 35 percent of your credit score. By becoming an authorized user on your husband's account, that history gets added to your credit file. In addition, 15 percent of a credit score is determined by the length of your credit history. This factor is a bonus for you if you are trying to build a credit history by becoming an authorized user.
Credit System Abuse
In 2007, FICO announced that it would no longer use authorize user accounts in determining credit scores, a decision that was quickly overturned. The credit system was being abused by people who would "rent out" their good credit histories by charging people, mostly strangers, to be added to their own credit account. After complaints by mortgage lenders, who by law are required to assess married couple's joint credit history, FICO introduced a new, top-secret formula that would somehow distinguish the deceptive piggybacking from the reported 50 million legitimate authorized users.
Improving Your Credit
Piggybacking has risks. If your husband defaults on payments, those deficiencies show up on the your credit report. If you divorce, you may not be on the line to pay your share of the bills, but chances are your husband will be fighting this court. So, the practice of getting on your husband's accounts should be just one part of an overall strategy to build and improve your credit score. You should regularly review your credit reports and dispute errors. Ensure you work out a system so that the bills get paid on time and the balances are kept low. Getting a secured credit card is another option to help build credit.
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