Having a low credit score can impact you in many different ways. There are more repercussions than just not qualifying for a car loan or getting a high interest rate on your mortgage. Having a low credit score can make your interest rates on your existing credit cards go up. It can also lead to you being denied a job or an apartment rental.
So with a number so important you figure that people are willing to do just about anything to get their credit score to rise – even if it is unethical. A loophole in the system was discovered. Due to the popularity of this system, known as piggybacking, it may no longer work though. It still raises the question of whether it is ethical or not to attempt to manipulate the system.
First let me explain what this loophole was. Let’s say you have bad credit and someone else has good credit. If the person with good credit authorizes you on their credit card account, their perfect history will show up on your own messy credit report. By having this extra positive information appear on your report your score will increase because of it.
If you have a trusted friend or relative they can do this for you. But if you don’t, there are some companies that actually offer this service. You, the person with bad credit, would pay a fee to this company who then pay someone with good credit to let you use their credit.
Once you’re added as an authorized user the credit card company will report it to Experian, Equifax and TransUnion. Your credit score will receive a boost. That increase in points may be enough for you to get a good interest rate on that car you wanted to buy. After you get it, you can be de-authorized on the credit account but you’ll keep your low interest rate.
Doing this, whether it still works or not, is completely legal. But is it ethical? Some say the credit score system is built to oppress the poor and help the rich. Thus it’s acceptable to game the very system you think isn’t ethical in the first place. Others, mainly those with good credit, claim their years of being responsible are less valuable now.
Whether this credit piggybacking system still works or not is up to debate, as is whether buying better credit is ethical.