Piggybacking to get better credit is a new term to me. I haven't heard it bantered about in the Saint Paul market. Piggy backing refers to the process of adding a co-signor to an existing credit card for the purpose of increasing the co-signor's credit rating. The existing credit card must be seasoned and in good standing in order for the co-signor's credit to increase as a result of being added. There are opposing opinions on whether the addition of a less credit worthy co-signor will impact the primary signor's credit rating, but it has been shown to improve the new co-signor's rating.
The question comes in whether this is legal or ethical. It's unanimous in written sources that this practice is legal. There's no jail cell at the end of this action!
Whether it's ethical or not is another question. Piggy-backing seems to be a quick way out (or is it up?). Rather than taking a year to improve one's own credit score, the piggy back rider is taking the fast route by looking for loopholes to work the system. It's an easy action, produces instant gratification, and can be consequence free for the co-signor.
The question of risk is for the primary account holder to ask. Obviously the primary account owner cares about the person who is piggy-backing or permission to join the account would not be given. IF the piggy-backer chooses to exercise the co-signor privileges or gains control of the on-line account, trouble could brew for both account holders. The primary signor could go down with the ship. In like manner, if the primary account holder stops paying, the piggy-backer also goes down with the ship!
Whether piggy-backing is a choice for you is a decision only you can make. Just make sure that all parties are protected so the friendship or family relationship you currently have is not jeopardized.
That's good to know about the fine print, Larry. I tend to be a full disclosure kind of person without the fine print, but so many people try to work around the system.
Posted by: Bonnie Erickson | February 01, 2007 at 05:33 PM
Bonnie, even if it is legal, if the creditor gets into financial problems, they could also have legal problems. Full disclosure language is often in the fine print. Lar
Posted by: Larry Cragun | February 01, 2007 at 03:40 PM