TOPIC OF THE MONTH:
Piggybacking / Renting A Tradeline
Clients looking to quickly boost their scores can use “piggybacking” to rapidly gain positive credit history. This tactic can help expedite the time it would normally take to increase a consumer’s score and get them approved for a big purchase such as a mortgage
What is piggybacking?
The term “piggybacking” in the credit world, is when a consumer becomes an authorized user or joint account member on someone else’s tradeline (typically a credit card) for the purpose of adding credit history to boost the client’s credit scores. This option is usually for newcomers with no previous or current positive credit history as well as consumers with low scores.
How does it work?
Consumers with the luxury of having a family member or friend with good credit that is willing to help, can add themselves as an authorized user or joint account member to a credit card to obtain years’ worth of payment and transaction history to their credit reports. This method can greatly benefit the client by creating and establishing history relatively quickly on the consumer’s report without needing to wait for new tradelines to season which normally take about 6 months. It’s important to mention that piggybacking carries risks, whether it’s done with a family member or “renting” a tradeline with a third-party company.
How will piggybacking affect my credit score?
Piggybacking could have a huge positive impact on a consumer’s credit report, however, it can lower the scores if the tradeline has delinquent payment history or the primary account holder utilizes the card irresponsibly. If your relative is not up to date with their payments and the card shows a high balance, it might do more harm than good. It is extremely important to take caution when asking a family member or a relative to add you to their account. The ideal scenario is to have someone that uses the card for occasional purchases, maintains a low balance and always makes on-time payments.
What if I don’t have a friend or family member to help?
If no friend or relative is available to give the client an extra boost on their score, our company offers a variety of tradelines with various ranges of credit history to help facilitate the process and increase the scores as fast as possible. Several factors come into play to determine which tradeline will give the best results but generally, the higher the limit and the longer the card has been open for, the bigger the boost will be.
There are a lot of variables to consider before advising clients which route to take, but generally, adding credit history can improve your borrowers credit score. Please do not hesitate to contact us if you, your colleagues or any of your clients have any questions or need further details. We are here to help!