How to piggyback on a credit score

/2010-04-06/


Are wee able to piggyback on parents' or life partners' great credit score?

The practice of "piggybacking" is a legitimate way to help relatives or friends boost their credit scores. You just add the person as an authorized user  of your credit card, and your good credit history could be transfered to your child's (spouse, friend) credit files.

The credit-repair experts insist that the process is completely safe, however both parties in the process take a risk by sharing their sensitive financial information, incl. Social Security and credit card numbers.

A step to a better credit score

Many families use the piggybacking practice to help build good credit history or improve the credit score of their relatives. For example, your children, as authorized users of your credit card share your positive account activity which will appear on their credit report. Once they're removed from this credit card records, it will take some time to get thecredit score information removed from their credit report. Thus your children may benefit from it in the long run.

Piggyback loan

Some lending companies found a way to avoid the conventional PMI (private mortgage insurance) by creating two loans: one for 80% of the whole price and another one - for 10% of the whole price. The remaining amount of 10% gets paid via down payment. That second loan is called a piggyback loan (or 80/10/10 loan).

Is this smart practice still effective now, in 2012? The answer is - yes.

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