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Revisiting FICO 08 Piggybacking

This article was written by in Credit. 4 comments.


Your money is important, and so I want to make sure I’m telling you the truth in every instance. A few months ago I wrote an article called What You Need to Know About the FICO Update, which contained some news about the process of “piggybacking”:

Not too long ago companies started offering to add someone with poor credit as an authorized user on an account belonging to someone with better credit. After a while, the credit rating for the less fortunate person would improve. Under the new formula, this sort of—let’s be frank—trickery will not be rewarded. Spouses and children, however, will not be penalized in the same way.

Throughout that day, a commenter named Bill tried to tell me I was wrong, and since the e-mail address he used was linked to a company that provides such a service (he didn’t make the address public, so I won’t, either), I still had my doubts.

And I’ve had doubts ever since, in both directions. I thought it’d be worthwhile to wait a few months and see if any news outlets made retractions or corrections to the initial flood of reports that FICO 08 will no longer reward piggybacking. So far they haven’t. Here’s one from May 13th that says the same thing again.

So, I thought, “Well, why not just see what Fair Isaac (the FICO people) say?” And after searching for “fico 08″ on their Web site, exactly one useful page shows up: Fair Isaac Innovation Will Restore Authorized User Accounts to Calculation of FICO 08 Scores.

What that article says is this:

[FICO's] scientists have discovered a way to restore authorized user credit accounts to the calculation of FICO® 08 credit scores while materially reducing any potential impact to the score from tampering. Fair Isaac is now adding the patent-pending technology advance to its FICO® 08 formula. The company estimates that more than 50 million U.S. consumers are legitimate authorized users on another person’s credit card.

It’s that last phrase that I think is the most important: authorized users on another person’s credit card. So, if you have the authority to charge something to a credit card that also has someone else’s name on it, that’s not piggybacking. That’s being an authorized user, and your credit score will benefit from being associated with that person.

In the descriptions I’ve read of services that provide piggybacking, you don’t get access to the credit line or the authority to charge anything on a stranger’s card. Of course you don’t; that would be absurd. I think this is the gap where FICO’s scientists are able to distinguish between authorized users and piggybackers, and why my original conclusion still stands.

Here’s a good article from Bankrate (that updated a previous article) which explains FICO’s:

  1. original decision to ignore all authorized users
  2. the protests (from people like Bill)
  3. and the subsequent tweaking that FICO made to keep authorized users, but still ignore piggybackers

Here are a couple of key phrases:

Legitimate authorized users, such as spouses, parents and children, have relationships with the primary accountholders and reasons to share access to the accounts.

Fair Isaac said lenders complained that using FICO 08 would inhibit compliance with Federal Reserve Regulation B, which requires lenders assessing a married person’s credit risk to consider the credit history of accounts shared by the spouses.

Fair Isaac is keeping the specifics of the new analytic approach secret but says it has found a way to restore authorized-user accounts to the formula but also reduce the impact of piggybacking.

To conclude: authorized users = spouses, children, people with a relationship to the cardholder. Piggybackers = unauthorized.

I don’t want to riddle your screen with links to each news outlet’s report, so I’ll just direct you to Google News for more. Check out a comprehensive list of articles from 2009 that all agree. (Well, they all agree, except for the ones that are reproductions of press releases from companies that offer piggybacking services.)

Published or updated May 19, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

{ 4 comments… read them below or add one }

avatar Olivia

Thank you for this clarification. I have been wondering about authorized users lately. Do you by any chance know whether it is better in terms of credit scores for a husband and wife to each have their own credit card and have the other person as an authorized user, to have two joint cards, or for each to have their own card without the other as an authorized user? Right now, my husband and I fit into option 3, but I was wondering if one of the other two options would make more sense? Thanks again for the article!

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avatar Eric

Cool. My sister can still benefit from this. :)

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avatar Bill

I believe I am the “Bill” you were referencing in your article. My name is Bill Airy and my company is proud to help those in need of a credit boost to offset the horrendous and extensive mistakes made by the credit reporting agencies (“Over 70% of all credit reports contain misinformation, of which 39% are bad enough to cause an application to be declined” – MyFICO.com).

The Fair Isaac Corporation and their FICO scoring model is trying to fit everyone in America into a little box they feel fairly defines a credit worthy person. Ask any psychologist or sociologist if that can be done with any amount of success and they will clearly say “no”, and point to the current “banking crisis” we find ourselves to be in today. Banks have become lazy. Instead of actually doing their jobs and finding out whether or not Mr. Applicant pays his mortgage on time, how much his employer pays him, and how much cash he has saved up in the bank, they simply rely on a 3-digit number. Doing so saves time during the application process, but as you can see by my services, the process they use to calculate a credit score is riddled with flaws, therefore causing system-wide “loan default prediction” failures; hence home foreclosures and automotive manufactures in financial duress.

I would have been more than happy for you to make my comments public. In fact, I was hoping that you would in order to set the record straight. Many news and media outlets are simply the shameless marketing and distribution arm for large and hegemonic corporations like the Fair Isaac Corporation. It appears, Mr. Smithee, you are no different. This is confirmed by the poor legal interpretation of the Equal Credit Opportunity Act appearing in your article – the Federal Trade Commission clarifies an authorized user does not actually need to have physical access to an account or be related to the primary cardholder in any way ( http://www.ftc.gov and [advertising url removed by editor] ). A similar interpretation of the ECOA was expressed in an article written by a recent Harvard Law graduate, Marshall Silver, in his paper on “Consumer Finance” ( [advertising url removed by editor] )

The “Not-So-Fair-Isaac” Corporation has already released their FICO08 software – a year and a half delayed for legal concerns brought to light by our legal team. If what you say is true, then why are my “authorized user” tradelines still boosting people’s credit scores every single day? The fact is, FICO, the credit reporting agencies, and the credit card companies can’t differentiate between whether or not the AU is related to the primary cardholder in some way, or if the AU actually has physical spending power on the account. That information is currently unavailable to them.

I challenge you; better yet, I dare you, Mr. Smithee, to add one of our cards to your name and see what it does to your credit score. If nothing happens to your score, then fine, everyone will know that piggybacking doesn’t work anymore. On the other hand, when you realize your credit score has gone through the roof, you will be forced to admit this credit score boosting method still works, just as it always has. I truly doubt you have as much dedication to your career and to your readers as this would require, but my God, I hope I am wrong.

- Bill

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avatar Charles

I read over the commetns by smithee and your responses to the fact that you are still able to raise scores using authorized user info unrelated to the borrower.

Is it not true that often lenders still use older versions of FICO housed at the bureaus? Maybe that is the reason they still rise.
If lenders purchase the new version FICO 08 maybe they will just limit it to 5 authorized users–related to borrower?
But if lenders continue with older versions of FICO (Classic FICO) the adustments made to FICO won’t apply.

Please clarify

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