Which providers help authorized users build credit?
Credit card providers that report account activity for authorized users include:
- American Express
- Barclays
- Bank of America
- Capital One
- Chase
- Citi
- Discover
- US Bank
- Wells Fargo
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With so many ways to improve your credit, clever people are always looking for new ones.
One of these methods is piggybacking. Piggybacking is a tactic where one person seeks to raise their credit by becoming an authorized user on another person’s credit card account.When it works, it can lead to a significant increase in your credit score. And you could use it to make a few extra bucks if you already have good credit. But its legality is unclear, it’s frowned on by the credit industry and it’s far from guaranteed to work.
Here’s the basic idea: As a cardholder makes on time payments on a card, the card’s provider reports that cardholder’s payment history to the credit bureaus. This, in turn, increases their credit score.
Now, let’s say that cardholder adds you to their card as an authorized user. The provider may then report the card’s account activity for you as well. If you’re lucky, the card’s entire payment history shows up on your credit report and raises your credit score.
Without doing much, your credit score goes up. That’s piggybacking in a nutshell.
The legality of piggybacking is unclear. Many banks frown on it — especially when it’s between strangers. They might even argue it constitutes fraud. However, the government hasn’t given an official ruling.
Providers seem to be more accepting for piggybacking among family members. More controversial is credit-repair companies that attempt to leverage the practice for profit.
Such a company pairs two strangers — one with a credit card and good credit score, the other who wants to become an authorized user. Then, it acts as the middleman in a for-profit transaction.
The authorized user pays a fee to be added to the other person’s account, and the cardholder gets a cut of that fee.
Piggybacking isn’t always effective. Some providers don’t report payment activity for authorized users. Even if you find a provider that does, it might not consistently do so. If you’d like to try piggybacking, call the card provider and ask about their reporting.
When piggybacking does work, it can produce noticeable results. Many parents have helped their children build strong credit scores before age 18. And a stranger on someone’s card account could see a significant jump in their credit score — though it’ll only last as long as they remain an authorized user.
For another option to build credit, consider a secured credit card.
Some issuers only allow spouses as authorized users. However, all major card providers allow authorized users with almost no restrictions. Most commonly, the individual you add to your account must be at least 13 years old.
If you’re getting a card from a big bank, chances are good that your provider reports card activity for authorized users.
Credit card providers that report account activity for authorized users include:
If you have a good credit score and need extra cash, you could add users who need to boost their credit. The most common way to do this is through a credit-repair company that offers tradelines — or credit accounts — for sale.
Here’s how it works: You rent access to your positive credit history by adding an authorized user selected by the credit-repair company. The company charges a fee to the person looking for the boost, and you receive a portion of it as payment.
Companies that can help you with piggybacking include:
Piggybacking isn’t always cheap. It could run you more than $1,000 to get on an aged, high-credit-limit account. Though it’s likely the most expensive option, this type of account could potentially provide the largest boost to your credit score.
If you take on an authorized user through a tradeline service, you’ll often earn between $125 and $275 while that person remains on your account. The time period is typically one to two months. You might earn more if your card has a high credit limit and has been open for a long time.
Piggybacking could be an effective way to build credit, but it comes with risks and sits in murky legal waters. The safest option is to only piggyback among family. If you’d like to work with a credit-repair company, do your research and beware the pitfalls.
Picture: Shutterstock
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