If you have a thin or short credit history, you may encounter issues with obtaining necessary home, car, or business loans from banks and other lending institutions. Not only that, but you may also be turned down for apartment rentals. In such a situation, you may want to consider getting piggyback credit lines to improve your credit score. According to the Board of Governors of the Federal Reserve System, such simulated tradelines can majorly increase your credit score.

What is Piggybacking Credit Lines?

Piggyback credit lines are authorized tradelines that you can use for increasing your credit score. As the term piggybacking indicates, when you use a piggybacking credit line, you are piggybacking on an already existing account with an established positive credit history. You pay a specific fee for renting the credit history in this manner for a certain amount of time.

Usually, it is until you have managed to improve your credit score; although you haven’t established the credit history for the account, the information gets noted in your credit report since you are now an authorized user. There is, however, no guarantee when you will be able to see an improvement in your credit score.

What is the History of Piggybacking Credit Lines?

The practice of piggyback credit lines has been around since the 1970s. The Equal Credit Opportunity Act came about in 1974 and issued the directive that creditors had to report spousal authorized accounts to the three credit bureaus. Lenders now needed to consider these accounts as well when they evaluated credit histories. However, when giving information to the bureaus, the creditors didn’t usually provide any distinguishing indications about which were spousal accounts and which weren’t. What happened as a result was that the credit bureaus treated all the authorized accounts in a similar way.

The Federal Reserve Board’s Regulation B implements the Act for piggybacking credit, and it is considered a legal method of helping people boost their credit scores.

What do You Need to Know About Finding the Right Piggybacking Credit Line Companies?

While it is legal, there are many scammers around that use the process to separate people from their money. So, if you are looking for a piggybacking company, you need to carry out proper research and find one that is both legitimate and reliable. Here are a few things you need to look for:

• If any company asks for an upfront fee for the piggybacking services, it is most likely a scam. According to the CROA Section 404, companies cannot ask for fees until after they have carried out the necessary services.

• You should make sure that the company has proper business registration to operate in your state.

• The company should have a phone number where you can contact them and talk to them. If they refuse to answer the phone or respond to your queries, you will be better off finding another company.

• You also want to hire a company that is knowledgeable about piggybacking credit. For that, of course, you will have to do some homework at your end as well. You need to know what you are getting into to make sure the company does as well.

• Before signing a contract with any company, ensure that it spells out the terms and the pricing details. You don’t want to be surprised with unexpected fees later.

What is the Difference Between a Piggybacking Credit Line and Credit Repair?

It is essential to be clear that piggybacking credit is not the same thing as credit repair. In credit repair, you or the company that you hire will review the credit reports from the three credit bureaus and examine them for errors. If there are any, you will need to file a dispute to remove these negative items from your credit report. With piggyback credit lines, on the other hand, you become an authorized user of an established account to enhance your credit score.

While you can improve your credit score with both credit repair and piggybacking credit, you need to keep in mind that it may be difficult or even impossible in both cases if you have extensive negative items on your credit report.