Credit Invisible Archives - My Credit Track

Whenever I have someone in front of me and I am reviewing their credit report, it can be tempting to use terms that are common to me but foreign to people outside of the banking and credit world. The term tradeline is one of those words that people are not always familiar with when dealing with their credit. A tradeline is just another term for a credit account that is reported by the lender on your credit report. Lenders have guidelines they use that may require you to have a certain amount of tradelines on your credit report. Tradelines also come into play when discussing your credit mix. The number of tradelines on your credit report can have a direct impact on your credit score. Why Are Tradelines Important To Your Credit? Tradelines are just another term for a credit account and describe the creditor and the debt on your credit report. They are important to you and your credit because they help lenders to determine whether or not you can handle certain types of credit based on the handling of your current tradelines. Both lenders and the FICO Scoring system use tradelines as a way to determine creditworthiness. Lenders will often look at your tradelines to get more information before making a final lending decision. The number of tradelines you have can directly affect your credit score. Knowing upfront what creditors and the FICO scoring models are looking for is an important step to rebuilding your credit. If you are deficient in a good mix of different tradelines then that can have a negative impact on your score. Here is typically what is reported on your tradelines. Lender's name and addressType of account - Revolving, Installment, Mortgage, etc. Partial account numberCurrent statusThe date the account was openedCurrent balanceDate the account was closed, if applicableDate of last activityRecent BalanceOriginal loan amount or credit limit It is important that this information is accurate because it can be a factor in whether or not you are approved for a loan. Does Adding Tradelines Raise My Credit Score? Yes, it can for the most part, but you need to be cautious. For any score related question like this, there are always caveats. Having too many credit lines can hurt your score. If you have a good mix of credit and keep adding tradelines then eventually makes you look overextended. A good mix of credit is important and something to keep in mind when creating your credit file. Having too many tradelines can be a warning to lenders that you can get into trouble. High utilization of credit can be a problem even if you are not using the tradelines. How Long Do Tradelines Stay On Your Credit? A tradeline will stay on your credit as long as the account is open and once it is closed, an additional 7 years. This is why, if you have a tradeline with good credit, you do not want to close the account. Once the account is closed it has less and less effect on your credit score as time goes on. Even if an old tradeline has a couple of late payments if there is more good than bad this may be helping your credit score. Closing the account does not make it disappear from your credit report but any good it was doing will no longer impact your score the same way. Understanding credit scores is important before you start the process. How Can I Get More Tradelines? You can apply for new credit with lenders you think will be approved by. When you have credit issues, the best way is to apply for a credit card, a secured credit card or credit-builder loan. However, there are a couple of ways to get tradelines without opening new accounts of your own. If you have insufficient credit, we suggest that you become an Authorized User on your friends and family members account for a few months, or as long as they will let you, and their information will automatically show up on your credit report creating a credit history for the length they have had the accounts. You just need to make sure they are adding you to a credit card that has no late payments and a low balance. Many people also purchase tradelines from a company that specializes in setting this up for you. Yes, it is legal to have complete strangers add you to their credit card. There are some risks to the original card owner that is lending or selling you their credit history. Banks are not happy that people are able to create a new credit history with a couple of phone calls. So the person who owns the card is at risk for the bank closing their account if the practice is abused. If it is not something the account owner is doing on a regular basis then is a fairly risk-free process. Regardless of which way you go, adding tradelines to your credit report will assist you in raising your credit score dramatically in the right circumstances. If you have a lot of bad credit, you will want to get your credit repaired first before adding new tradelines. How Much Do Tradelines Cost? Purchasing tradelines can be expensive. There are some companies that have tradelines for under $500 but they go quickly and are difficult to find. You will want to count on spending $600-1500 for a decent tradeline. The longer the credit history and the higher the credit card limit the more expensive it will be. But if you think about the thousands of dollars you can save on your mortgage or car payment, then the cost is worth it over time. Meanwhile, you will want to be applying for new credit for yourself so when the purchased tradelines fall off your credit report you have already established new credit. Just a special note to this, if you are in the market to purchase a home you will want to coordinate with your mortgage professional so you do not jeopardize your chances of qualifying. Check Your Credit Often As you are learning and adding tradelines to your account, you will want to continue to check your credit and make sure there are no mistakes. Even a good tradeline can have errors that can affect your credit report and lenders will be looking at your tradelines to get more information. You can get your annual free credit report from annualcreditreport.com. However, if you want to check your credit report more frequently and see your FICO credit scores all in one place, we recommend MyFico.com so you can stay on top of your report monthly. Pin it for later!