What are tradelines? Impact on Credit Scores
Making sure that you have the best possible credit score is very important, and you really need to try and improve it the best way you can. But what a lot of people don’t know that credit is indeed dependent on tradelines. So, what are tradelines and why are these very important? Even more so, how can you actively manage the tradelines in order to obtain a very good credit score? Let’s find out!
What is a tradeline?
When you are asking what is tradelines, you will notice that this is an account shown in the credit report. Many times, even the credit bureaus are using this term. For the most part, tradelines meaning is split into 3 different categories. When you are wondering what are tradelines on credit report, sometimes they can be installment credit tradelines. These are credit accounts you are paying via an installment system. In this category you have car, student, personal loans and mortgages. Needless to say, these tradelines can be unsecured or secured.
Then we have the revolving credit. When you assess what is a credit tradeline, you will notice that these are basically credit lines you can charge on and then you pay on a recurring system. Usually these rely on credit cards, but there can be other revolving credit options depending on the situation.
What’s important to keep in mind is that you also have alternative credit. When you study the tradeline meaning, you’ll see this is one of the lesser-used tradelines. It covers things like subscriptions, utility or rental payments. Needless to say, this is not exactly a credit account, but you can still use these tradelines in various different ways as you calculate credit. These alternative methods are not reported by the company, the only time they appear is when you use a reporting service.
Information found in a tradeline
When you learn what are credit tradelines and what is a tradeline on a credit report, you’ll notice that a lot of information there qualifies for this particular topic. In fact, every tradeline covers a specific piece of account data. However, not everything will have the same influence. Some things will be very important for the credit score, others less so.
In regards to the basic facts, these are the date the account was created or closed, the account status at this time, but also balance, credit limit, your payment history, the original loan amount, account type, creditor name, account numbers and the lender address.
However, you can’t expect all the tradelines to report all the info. So there will be many instances when tradelines will look very different. Still, it’s important to have a good idea of what tradelines cover and what they include. That’s why you want to know what is a mortgage tradelines or what are tradelines on credit report, because it does influence your finances quite a bit.
What is not a tradeline?
Now that you know what is tradeline, you also want to know what’s not a tradeline. The important thing to note here is that not every piece of info in the credit report can be seen as a tradeline. In fact, personal info is never seen as a tradeline. The same can be said about public records, collections, even credit inquiries. Sure, they are influencing your credit score, but these are not tradelines.
What is a tradeline used for?
The important thing to keep in mind here is the fact that tradelines are a part of your credit history. Which means companies that keep tabs on your credit score will use the tradeline info and your credit profile as the means to calculate your credit score. Needless to say, the credit length history and payment history are vital pieces of information that will always influence your credit score.
Not every credit score company has the same scoring model. Some of them will go for a different scoring system. With that in mind, all of them will know what are credit tradelines and they will use them in order to calculate your credit score. The same thing is valid for lenders, they use different scores to judge a loan, and these things will indeed make a major difference.
It’s possible to become an authorized user and build your credit that way. You do need to have activity on the account and the authorized user is reported to the credit bureaus. Adding a younger family member to your account will help build credit, but any irresponsible use and negative information can lead to problems. So you do need to ensure that the account is used wisely, otherwise tradelines might include negative pieces of information.
In case you end up removed from an account, the tradeline of that account might still appear in your credit report. This mostly depends on the lender and their own policy. You really need to address the situation wisely and in the end the benefits you can receive are nothing short of impressive in the long run.
Is there a way that tradelines are affecting your credit score?
Of course, some tradeline factors will have a major influence on the credit score. The payment history is crucial, since it shows how often you repay everything. The same thing can be said about debt, more specifically how much unpaid debt you have at this time covering multiple accounts.
The credit age and also the credit account types you have, all of them are super important and you need to address that the best way that you can before it will have a negative impact. Rest assured that once you know what are tradelines on credit report, you will understand their major influence and reason why they are so important.
What’s crucial to note here is the fact that positive tradeline info will help boost your credit score like having a good credit utilization or making payments on time, all of these things matter quite a bit. Do keep in mind the fact that you can also have negative information like bankruptcy, late payments and charge-offs that will have a negative impact on your credit. So yes, the way your credit score is affected doesn’t depend solely on the tradeline info, instead the full credit profile will be extremely important.
How much time will a tradeline be included in the credit report?
The timeline will vary and it mostly has to do with the account info associated with your tradeline. For example, if you have negative info, then it can fall from your report. Charge-offs and late payment situations can stay with the report for 7 years or more. However, the bankruptcy will stay on the credit report for 10 years. Yes, these can stay with you for a very long time, but eventually they end up removed from the account.
Is adding a tradeline a good idea?
You need to consider the fact that tradelines can be very positive, but also negative too. If you have a bank account that’s new, then you will notice it has a very direct impact on new credit. Lenders will check your credit and then they will do a hard inquiry, which will lower your credit score a little bit. With that in mind, if you have multiple hard inquiries at once, that can be very damaging to the credit score.
Then there can also be negative impact on the credit history length score, and that’s because it will make the average account age lower. With that being said, if you add a revolving tradeline, that can bring you a very positive impact, since it shows that you are indeed using your credit right and pay everything on time.
That’s the thing, the way you utilize your credit is super important, since it will have the most impact on your credit score. If you have a new account, then its credit limit gets added to your total credit limit. What you want to do is to pay every piece of debt on time and you should also consider keeping a low balance if you can. That means every new tradeline will have a positive impact. It will improve the payment history and accounts owed parts of your credit score.
What happens if you close a tradeline?
As you can see, adding a tradeline is like a double-edged sword. It might be good, but it might also be bad. In the case of closing tradelines, you need to know what is a tradeline alert and what is tradeline credit in general. What you will notice is that closing a tradeline might show you are not responsible with your debt, and that can be extremely important to take into consideration.
What happens when you close the account is that you are losing the positive tradeline information. The upside is that a closed account will not have the same impact on the credit score when compared to an open account. But this can still be very problematic, and that’s the thing you want to take into consideration.
When you close the account, you will notice that credit balance, the amount you got as a loan and the credit limit is removed from the credit reports. Needless to say, it will not have a good impact on the amounts owed credit score part.
Then there’s also the fact that the credit age is not halted. Even if it won’t be removed right away, this stops the account age and that will be a problem even if you open a new account.
That being said, if you have positive payment history in those tradelines you want to close, that info is still going to be active 10 years after you close the account. Negative info will eventually fall off after 7 years, which is incredibly important to take into consideration. If you have just a few tradelines and want to close one, then this closure will have more impact when compared to having a dozen tradelines and wanting to close one.
What should you know about the authorized user tradelines?
These tradelines are important because you have a person authorized to make payments on your behalf. If you become an authorized user yourself, then the credit card is shown as a tradeline on your credit score. Of course, the credit card issuer has to report authorized users. Is this weighted the same as a primary account? No, but it still affects things like credit utilization, account age and payment history. This will not have a major credit score impact, but it will slowly help increase your credit score and that on its own can be extremely helpful!
Is it possible to buy tradelines?
The short answer is yes. You can do that but it’s not exactly something that credit bureaus or credit card companies are recommending in any way. What you’re doing is you end up paying a person with good credit to make you an authorized user for a specific timeline. While that might sound great, the truth is that it can end up being a huge challenge.
Generally, if you go with a seasoned tradeline, then this will end up being very expensive. Plus it won’t have a massive impact on the credit score. It’s low risk for the account owner, and they get a good payday. Not only that, but you can damage your credit because you don’t know how the account owner manages their account. In fact, the account can end up being closed. And there’s also the fact not all companies are reputable.
Conclusion
Learning what are tradelines is very important because it can have a major impact on your credit score. You always want to know as much as possible when it comes to what are tradelines for credit and how you can use them. As you can see, tradelines are crucial and there are many different ways they can affect your credit score. It’s an important part of the credit process, and if you make the most out of your tradelines, you can actively increase your tradelines. But do keep in mind that every tradeline can have its own influence, so keep an eye out for all of them to monitor and track results!
