Piggybacking on Good Credit Going Away?
I posted about piggybacking for dollars recently, a practice where those with poor credit pay to get added as authorized users on credit cards belonging to those with good credit. This results in a credit score boost, allowing those with poor credit to get offers of credit based on their artificially-boosted score. Piggybacking is also done among families to help boost the scores of family members and help introduce children to the world of credit by starting them off with good credit.
Piggybacking Roils Credit Card Industry describes more about how Fair Isaac is responding.
… after being contacted by The Associated Press for this story, Fair Isaac Corp., the developer of the widely used FICO score, said it will change its credit scoring system beginning later this year in a way it contends will end this little-known but potentially high-impact mortgage loan loophole.
So what does this mean? It means that if you have a family member who is riding your good credit as an authorized user, you may want to call up your credit card company and have them added as a co-borrower. Alternatively, they could also go out and get a new credit card in their own name while they still have the good credit history on their credit report from being your authorized user.
If you’re paying to piggyback on a stranger, Fair Isaac is targeting you and hitting everyone else with a legitimate use for having an authorized user. Yeah, thanks.
Related Posts:
June 6th, 2007 at 5:57 am
Yeah, I was just telling my fiancé about this last night. I was going to add him to my oldest card when we went mortgage shopping, but now I’ll just make him a co-borrower. I’ve already co-signed an auto loan for him. The idea is to try to help his credit as much as possible before we get the loan.
June 6th, 2007 at 8:04 am
If you plan to move next year, there’s a good chance your mortgage company will still be using the old formula or a slightly modified and proprietary version of it that will still take into account authorized users. It’s still better to work on it now than later, though.
June 12th, 2007 at 1:07 am
[...] MoneyStuffed Get Your Fill of Stuff Here! « Piggybacking on Good Credit Going Away? [...]