Authorized User Credit or Piggyback Credit remains a
part FICO 08 credit scoring
by Lisa Phillips   
September  2008
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Basically the primary account holder would allow a limited number of unknown authorized users to
be added to their good credit accounts and the company would pay the primary account holder a
fee for brokering these deals. Kind of like "renting" out your good credit for a limited term and
getting paid for it.

The auhtorized user would not actually get use of the credit account; however they would get the
benefits of the primary account holder's good credit history. The authorized user would be added
for a short period of time in order to add a quick boost to their credit scores. Some of these
accounts would be more than 20 years old with excellent payment history and very low balances,
something FICO scoring looks kindly upon. According to Fair Isaac Corporation, there are more
than 50 million authorized user account holders.

The industry of purchasing authorized user accounts began to get attention and FICO decided it
was hurting their monopoly. Bad credit scores is a lucrative business for banks, lenders and credit
reporting agencies that sell marketing lists of consumers information. They have the opportunity to
make more profit on consumers who have low credit scores. The difference in interest rates for
good credit consumers as opposed to bad credit consumers is astronomical. Banks and lenders
have made billions of dollars from people with bad credit by charging extra fees, costs and
exorbitant interest rates.

Recently, the "credit crunch", has caused many banks and lenders to tighten their lending criteria. It
has become more difficult to get credit cards, personal and auto loans and mortgages due to the
large volume of default rate on high interest loans. In response to the growing use of authorized
user or piggyback accounts Fair Isaac Corporation was to develop a new scoring model that did not
include authorized user accounts in the scoring model.

FICO 08 was to begin some time in 2008 and all the major credit bureaus were to begin using the
new scoring model. However, critics have expressed that FICO 08 would be in violation of the Equal
Credit Opportunity Act which requires lenders to consider a spouse's credit history when
determining the credit risk of a borrower. Utilizing FICO 08 would prohibit  lenders from complying
with the Equal Credit Opportunity Act.

Fair Isaac Corporation has since revised FICO 08 to include the use of authorized user accounts;
however, they now say it has a way to recognize the abuse of authorized user accounts. Stay tuned
for further develops, but for now, it looks as though authorized user and piggyback credit is still a
viable option in boosting credit scores.
In 2007 there was lots of talk about the end of
authorized user credit also known as piggyback credit,
as a means to boost credit scores. In June 2007, Fair
Isaac Corporation (FICO) announced they were rolling
out a new credit scoring model that did not factor in
authorized user accounts.

The benefits of becoming an authorized user is that
the primary account holders credit could improve the
authorized user's credit scores and help them build a
solid credit history.

The primary account holder has to have a good
history of on-time regular payments. In the alternative,
if the primary account holder was to be late paying an
account, that would reflect on the authorized user also.

Traditionally, authorized user accounts have been
used when spouses add one another to their already
established credit accounts or parents add their
children to their accounts.

Again, the authorized user is not financially
responsible for any debts incurred on that account,
even if the authorized user makes those debts. In
recent years, companies have emerged that offer
authorized user accounts for a price.
Credit Card Offers for Average Credit