A “scissoring-type” current-perpendicular-to-the-plane (CPP) magnetoresistive sensor with dual ferromagnetic sensing or free layers separated by a nonmagnetic spacer layer has improved stability as a result of etch-induced uniaxial magnetic anisotropy in each of the free layers. Each of the two ferromagnetic free layers has an etch-induced uniaxial magnetic anisotropy and an in-plane magnetic moment substantially parallel to its uniaxial anisotropy in the quiescent state, i.e., the absence of an applied magnetic field. The etch-induced uniaxial anisotropy of each of the free layers is achieved either by direct ion etching of each of the free layers, and/or by ion etching of the layer on which each of the free layers is deposited. A strong magnetic anisotropy is induced in the free layers by the etching, which favors generally orthogonal orientation of the two free layers in the quiescent state.