Remember when your dad would give you piggyback rides? Dad may have extended the favor by also letting you piggyback on his credit score. For many college students, it’s a way to start their own credit history and qualify for loans. Well, piggybacking is no longer allowed. According to the St. Paul Pioneer Press (“Getting College Credit,” Aug. 15, 2007), Fair Isaac Corporation (FICO), the credit guru that determines credit score standards, is changing the rules.
While potential borrowers will no longer be able to use someone else’s history, FICO is introducing new methods of gauging the credit score of those who have no history. While not the traditional credit score system, the new method will include such things as your cell phone payment history, how often you dip into overdraft protection, and even DVD club payment history (so you may want to ask yourself if you’ve been nice to Netflix).
I think it's a good thing.
I like to be self-supporting and get by on my own merits. I think that the youth of the nation (myself included) can benefit from this push to be more fiscally responsible in all financial dealings.
In all fairness to qualify my situation, neither of my parents have good credit so I HAVE to live by my own merits. But it has been a good journey, and finding family friends with good credit to cosign is another interesting journey in being responsible and forming a network.
When starting out, many students who are piggybacking have parents that can financially support their children in an emergency. It seems rather silly, since students who don't have a credit history can't qualify for loans, and it can take years to build good credit, even if you haven't made any mistakes. In the end, this will likely just result in further decreasing the number of students who can afford to attend college.
Eliminating piggybacking will make it more difficult for newcomers to open credit accounts. In this way FICO is looking to greatly reduce the number of defaulters. At least this is the way I see it. However, I disagree with their attempts to delve further into people's personal lives enough to find out whether we've paid our netflix bills on time.
I understand the FICO is looking for a better way to see if you will make payments on time but I don't see how eliminating piggybacking is going to help them reduce loan defaulters.
More importantly, where do they stop? They apparently have enough lobbying power to legalize finding out whatever they want about you. Soon they'll be checking private Facebook accounts to determine how much of the year you were employed and looking at your credit card bill to see if you have good spending habits or if you have payed to gamble online.