Keep reading the article to explore everything that you need to know about the scope, pros, and cons of piggyback credit lines.
For quite a long time, parents have helped their young kids piggybacking of their credit cards to initiate a credit life while it has been quite a common practice that spouses used to piggyback each other enabling them to buy a luxurious apartment or high-cost car etc. in fact, piggyback credit lines, in industry term ‘tradelines’ refers to adding somebody with low credit as an authorized user on someone else’s credit card with good history helps boost credit score as well as credit history of the AU.
Credit card piggybacking, in fact, emerged in the mainstream during the period of the great financial recession of this century when plenty of credit repair companies and individuals used the advantage of piggybacking credit lines to artificially facilitate common people/relations to qualify for mortgages or come out of bankruptcy.
Scope of Piggybacking
As stated above whereas someone with a poor credit score becomes an authorized user on someone else’s credit card with high credit score and thereby inherits the same and boosting their credit status is piggybacking. While many people confuse it with joint account, the major difference is that an authorized user is not legally liable to pay the dues on the credit card or make any changes in it whereas a joint account holder can do. Nonetheless, an authorized user finds the full credit history of the primary cardholder reflected on his/her credit report while boosting the score. Thus, piggyback tradelines are an effective way to enjoy access to good payment history, age of that account and its utilization rate. When these features are not positive, it can risk you to drop your credit point further.
Piggyback Credit Lines
As you’ve seen how piggybacking is used in the family circle, when it comes to your turn, you can get the same advantage for some fees to piggyback credit lines or buying tradelines from its reputable vendors. After having the details of you and the charges, the credit repair company will match you with one of their credit card holders having considerable credit score and add you as an AU to the person’s credit line i.e. credit card. Equally, the primary cardholder gets a portion of the fee you’re paying even though you don’t receive the original card and the tradeline company performs as a middleman in the deal.
How does it Work?
In order to understand how to piggyback credit lines works, first of you, you need to understand the fundamentals of credit score. You might be aware that the three major components that affect your credit score are 1) your payment history, 2) available credit in your card that refers to your credit utilization and 3) the age of your credit history. Precisely, your score states potential lenders how you’ve used your debt so far. Now, as you become an AU, the primary user’s credit history appears on your statement and increases your credit score with credit limit. On the contrary, this can equally lessen your credit utilization ratio if you piggyback a credit line that has a low balance. Similarity it can increase or shorten your credit history which are some risky sides of piggybacking; which is why while buying tradelines, do thorough research and work only with high profile companies.
Is Piggybacking Legal?
There’re plenty of disagreements about whether piggybacking on someone's credit card is legal or deceptive. According to the conclusion of different U.S. commercial laws or FICO whereas consumers are misled by fraud piggybacking companies, it’s obviously illegal. However, unless it is misused for some misdoing this is lawful in the eye of law.