‘Piggybacking’ to improve credit scores

Hand erasing the word debt on blackboard

Borrowers with bad credit "piggybacking" on the good payment histories of consumers with good credit is the latest Internet scheme to boost credit scores.

It's expensive. But it's legal. And it seems to work -- at least for now.

Here's how piggybacking plays out: Shortly before applying for a loan, consumers with bad credit pay to become an "authorized user" on someone else's credit card.

While they can't actually use the card, its impeccable payment record is added to their credit report, boosting their credit score and making it possible to qualify for a loan they could never get with their true credit score.

Instantcreditbuilders.com says one borrowed credit card can increase a bad score between 30 and 45 points, two cards between 60 and 90 points, and five between 150 and 205 points.

It charges $900 for the first credit card and somewhat less for additional cards. Cardholders are paid between $100 and $150 for every authorized user they're willing to add to their account. Instatecreditbuilders.com keeps the rest.

As you might expect, banks and mortgage companies consider piggybacking to be nothing short of fraud, designed to deceive them into granting loans they should, and would, reject.

Fair Isaac Co., which created the most widely used credit scoring system, agrees. After its closely-guarded formula is revised this September, you'll have to be the primary name on a credit card account for it to affect your FICO score. Authorized users will be disregarded.

That should put an end to piggybacking.