topic Piggybacking Credit History in Understanding FICO® Scoring

Piggybacking Credit History

Anonymous — Thu, 03 Dec 2009 14:48:57 GMT

I had my girlfriend added to an account that is a CC (that i have had for 1 year 2 months) about 2 months ago. We pulled her Experian file and that account showed up as her having the account the same amount of time I did. So in one month, she got over 1 year of credit hsitory. So my question is when a lender pulls her credit file, can they tell at all that she hasnt had credit that long or is there no way for them to tell that she on only an authorized user. I mean im really glad to help her out, but how is this fair? Its almost like cheating the system isnt it?

Re: Piggybacking Credit History

Anonymous — Thu, 03 Dec 2009 15:23:44 GMT

Lenders can tell this is an authorized user account for her. If you look closely, there is a part that says "RESPONSIBILITY" which then says "authorized user"

If this were her account it would say "individual." If it were a joint account, it would say "joint."

Lenders don't consider this as her account. But FICO does give her the benefits of the account age, CL, history, etc. And so yes, this is sort of a "cheat" because it does not actually tell anyone if your GF is credit worthy...because she has not personal history to provide this.

But, this is currently a way that she can get a "jump start" on credit. The theory is that if she is a "true" authorized user, then she has access to the account and can actually use it. If she uses it, then the account use represents some credibility to her usage since if her charges are not timely paid, then the account will negatively reflect the non-payment.

The debate is: is she really an authorized user? Does she have a card that she is authorized to use, and does she use it? If not, then she isn't actually an authorized "USER" she is "PIGGY BACK" as you put it. Authorized users are "users" of the account and this means the tradeline history will reflect their use in addition to primary accountholder use.

This is the dilema that FICO has: How to distinguish true authorized users from "piggy back" trade lines. At one point FICO was going to remove AU's from scoring consideration. They reconsidered this, but the understanding is they are looking at ways to validate true AU's from piggy back. That seems to be a tall order.

Message Edited by txjohn on 12-03-2009 07:23 AM

Re: Piggybacking Credit History

Anonymous — Thu, 03 Dec 2009 15:47:57 GMT

Alright, thanks. So to pretty much sum up, it will help her FICO score, but thats it. If a lender pulls her CR and this is the only account they find, its not going to really help her get a loan or a CC, correct? Also, it says on her CR that her responsibility is "joint." I wasnt sure if this means the same as authorized user. Thanks

Message Edited by Kylan1234 on 12-03-2009 07:47 AM

Re: Piggybacking Credit History

Anonymous — Thu, 03 Dec 2009 19:48:46 GMT

Yes it will help. My diatribe was on theoretical and ethical debate.

Many credit decisions are driven by FICO alone, if there is no derog. FICO does not distinguish any difference between AU and individual accounts for scoring purposes at this time.

Even if a creditor pulls the CR, unless they closely scrutinize the exiting TL, they may not even notice that it is AU.

Plus, she will be able to qualify for some of the builder cards, store cards, secured cards and other types of credit that will expand her credit over time.

Re: Piggybacking Credit History

Anonymous — Thu, 03 Dec 2009 23:54:00 GMT

Thanks for the help.

Re: Piggybacking Credit History

Jazzzy — Fri, 04 Dec 2009 03:01:10 GMT

@Anonymous wrote:
Alright, thanks. So to pretty much sum up, it will help her FICO score, but thats it. If a lender pulls her CR and this is the only account they find, its not going to really help her get a loan or a CC, correct? Also, it says on her CR that her responsibility is "joint." I wasnt sure if this means the same as authorized user. Thanks

No..."joint" is very different from authorized user. This means that she is as responsible for the bills on the card as you are.

Did you mean to put her on as a joint user?

Re: Piggybacking Credit History

Anonymous — Fri, 04 Dec 2009 18:51:55 GMT

I had the account 100% in my own name for 1 year 2 months. Then had her added to the account by her co-signing. I'm not sure what makes the difference in adding her as an authorized user and joint, but this is what we did to have her added to the account. I did this only because she has no credit and I figured it would give her a little jump start. It didnt matter to me how she gets added as long as they report to the CBs; which they have.

Re: Piggybacking Credit History

haulingthescoreup — Fri, 04 Dec 2009 23:45:19 GMT

It doesn't sound like she's joint, since she was able to add on later. Usually joint status arises from applying at the same time, although I suppose it could be done in stages.

If she is joint, I would think that the lender would have pulled her credit report. Do you know if she has any hard inqs from them?

The whole point of joint status is that each person is equally and fully responsible for all charges on the account, regardless of who made them and under what circumstances. By contrast, an authorized user has access to the card, and generally has a card with their own name on it, but isn't liable for any charges. One slight exception: I understand that American Express will go after the AU for charges made by the AU, but still, not for all charges on the card.

Entangling personal credit can create some messes on down the road. Going joint on a mortgage makes sense (and is usually necessary), but I wouldn't advise going joint on anything else at all, period. In most cases (not all), AU status has the same results.

Re: Piggybacking Credit History

Anonymous — Sat, 05 Dec 2009 00:26:14 GMT

Several CCC's allow for a joint user to be added after the fact including:

BoA

Orchard

Firestone (CFNA)

In fact Orchard will only add a joint, not an AU, and they require it to be a manual snail mail form that they mail to you, you complete/sign then mail back.

Re: Piggybacking Credit History

haulingthescoreup — Sat, 05 Dec 2009 00:42:26 GMT

Good to know, txjohn. I will attempt to add it to my mental list, although it's getting awfully dang crowded up there these days.

Re: Piggybacking Credit History

Anonymous — Sat, 05 Dec 2009 15:31:38 GMT

Yes she did get hit with a hard inquiry. I pulled her Experian CR. It does say though on her CR that she is joint and not authorized user. The CC by the way is a KAY store card.

Re: Piggybacking Credit History

Jazzzy — Sat, 05 Dec 2009 16:24:39 GMT

This means that she is a joint user. Just make sure she knows that that means she is financially responsible for both what you charge on the card and what she charges on the card. Joint means that you are both responsible for all charges.

Being a joint user should help her credit, but joint usage can mean problems if things don't go well. If the relationship ends, these are the kinds of cards that need to be closed right away before they become problematic.