Last year the Fair Isaac Corporation announced that they would no longer include “authorized user” accounts in the formula that makes up our credit scores. This was bad news for a lot of people because piggybacking (using someone else’s good credit to increase your own) was a prime credit re-building strategy. Apparently though, FICO has reconsidered.

On July 31, 2008 they issued the following statement:

Fair Isaac regularly updates the FICO scoring model in a rigorous process called model redevelopment. On June 5, 2007, Fair Isaac announced that with our next model update which we called FICO 08, authorized user accounts would no longer be included in the calculation of the scores. Fair Isaac was trying to protect lenders and consumers from a new type of credit repair practice known as “piggybacking” or “tradeline renting”, which has received national attention from news media since March 2007.



Piggybacking is an attempt to artificially inflate consumers’ FICO scores and deliberately misrepresent consumers’ credit history to potential lenders, by paying consumers with good FICO scores to add strangers with poor FICO scores to their credit card accounts as authorized users.



After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user tradelines present on the credit report in the FICO 08 model. Our scientists have devised a method to consider these tradelines while materially reducing the negative impact that could arise from piggybacking.

Apparently there was a whole new industry practice going on where brokers were matching people with low FICO scores to people with high FICO scores. The person with the low FICO score would pay a set amount of money to be listed as an authorized user on the accounts of a stranger with a good FICO score for a set amount of time.

FICO did not announce how they plan to combat this practice if and when it happens again.

Underhanded scheming aside, this is great news for anyone who is legitimately trying to raise their credit score – especially for married couples where one spouse has a high credit score and the other does not.

If you have friends or family who are willing to help you raise your credit score, this is an excellent way to do it. Authorized users are not responsible for paying back any charges on the credit account, but the whole history of the authorized credit account still gets reported on their credit score.

A word to the wise:

If you plan to use this tactic to increase your credit score, you need to be very, very, sure that the owner of the credit account pays their bills on time. Otherwise, their late or over-the-limit transactions will show up on your credit report and lower your score. Remember that as an authorized user you essentially have no say over how the account is managed, so even if something is not your fault it could still lower your score.

FICO also has not said how much effect the piggybacked accounts will actually have on your score. There is no word yet on whether those types of accounts will have the same impact that a regular credit account has, or if they will factor in to a lesser degree.

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This entry was posted on Monday, August 18th, 2008 at 9:45 am and is filed under Credit Reports and Scores. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.