Credit Repair 4 Dummies Newsletter

Piggybacking is not long for this world. Fair Isaac Corp. has announced that within nine months the algorithm, they use to arrive at FICO scores will be changed. The new formula will virtually eliminate the effectiveness of piggybacking.

Presently an authorized user on someone else’s account benefits from the payment history of that user on that account. It is an easily exploited loophole in the credit scoring system. Authorized users, in spite of holding no payment responsibilities and making no payments, inherit the credit history of the account holder even though they may be total strangers. Piggybacking take advantage of this loophole in the following way: Someone with a sub-par credit rating will pay a credit repair agency to be added on as an authorized user of a client of the credit repair company with a superior FICO score and payment history. The company in turn pays a fee to their client cardholder for allowing the additional user to be added. This results in instant, huge increases to the credit scores of the added user.

The lending industry has been troubled over this practice for some time now. Their sentiments are summed up by Craig Watts, spokesman for Fair Isaac who said “The only purpose of the service is to misrepresent consumers to lenders.”

In response to this issue Fair Isaac will discontinue counting these authorized user accounts in their credit scoring calculations. This will put an end to piggybacking.An estimated 3.3 million people in the United States will see their credit scores drastically impacted in a negative way. This is due to the fact that,for these individuals, most of their credit history has been accumulated by their status as an authorized user on another individual’s account, usually a spouse or parent.

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