Can Being Added to Someone Else's Credit Card Improve My Credit?

Your parents have good credit. You, not so much. You may wonder if you could improve your credit by having one or both of your parents add you to their credit cards. Under the most recent credit scoring models, gaining access to someone else's credit card account may not boost your credit score much, if at all, even if the other person maintains excellent credit.

Equal Credit Opportunity Act of 1974 and Regulation B

Under the Equal Credit Opportunity Act of 1974 and Regulation B of the Federal Reserve Board, lenders and credit granters must consider accounts held and administered by both spouses when considering the creditworthiness of a married person's credit. As a result of Regulation B, Fair Isaac Corp. also includes accounts where an individual is listed as an authorized user in calculating the credit score of that user.

Authorized Users and Piggybacking

Primary credit card holders are permitted to add one or more authorized users, usually family members, to their account without an additional credit check for either party. The authorized user enjoys the same access to a credit card account as the primary card holder and also receives a credit card. However, in so-called piggyback operations, a commercial company adds the individual as an authorized user to the credit card account of a complete stranger with excellent credit who receives a fee. The authorized user pays a hefty fee for the credit boost, but never receives a credit card, according to Bankrate.

FICO 08

In reaction to the broad popularity of piggyback schemes, Fair Isaac Corp. proposed a new algorithm in 2007 that would exclude authorized user accounts from the calculation of credit scores. However, Fair Isaac conceded before a Congressional subcommittee that the proposed change would violate Proposition B and abandoned the plan. FICO 08, Fair Isaac's most recent credit scoring algorithm, continues to factor authorized credit accounts in an individual's credit score. However, Fair Isaac Corp. claims that the revised algorithm will diminish the credit boost from piggyback schemes without punishing so-called legitimate authorized users such as spouses and offspring, according to Reuters, quoting an industry press release.

Credit Bureau Reporting

If you are not the spouse of the primary credit card holder, the company may or may not report your status as an authorized credit card holder to credit reporting bureaus. In addition, VantageScore, an alternative credit scoring agency created jointly by Equifax, Experian and TransUnion, the three major credit bureaus, does not include authorized credit accounts in its scoring model. The agency claims that it is in compliance with Regulation B because it draws its data from credit bureau reports, which do not indicate whether an authorized account is a spousal account, Bankrate states.