What is a Tradeline? The Most Important Things to Know about Tradelines

What is a tradeline? It's a credit account.

Tradeline also known as trade line is a term commonly used in the credit world to refer to credit accounts on your credit report. The credit reporting agencies use the credit activities of tradelines on your report to calculate your credit score. 

Understanding how tradelines work helps you understand your credit habits better and apply that knowledge to improve credit score.

What is a Tradeline on a Credit Report?

Tradeline is a record of all activities associated with the borrower’s credit account. It is established on a borrower’s credit report when they get approved for credit. 

Two main kinds of tradeline that get reported by the creditor are revolving and installment. A revolving tradeline is a line of credit or a credit card account – which let the borrower use credit when needed (up to their credit limit). 

An installment tradeline is a loan of a monthly set amount – such as student loans, mortgages, and auto loans. 

Example of tradelines

Understanding Tradelines: How Do Tradelines Work on a Credit Report?

Credit bureaus use the information of trade lines from your credit report to calculate a credit score, a 3-digit number that measures your creditworthiness. If you’ve been managing your finances well – such as making payments on time, and keeping your balances low, your credit report will have an excellent history.

The tradelines details contain different types of data such as: 

  • Information about the lender and creditor
  • The type of credit getting approved
  • Payment status
  • Account milestones like credit limit
  • Payment history
  • Missed payments
  • Total amount owed

One of the most significant factors that determines your creditor score on credit tradelines is payment status. It indicates whether a payment has been made on time, and if not, how late it is. 

An important thing to note is even after an account has been closed, the trade line typically remains on their credit report for about 7 years.

What are Tradelines Used for? 

Before approving a loan application, the lender tends to look at your credit score – which is a snapshot of your creditworthiness, and examine your tradelines to get more information. 

However, they might need to get more detailed information about your credit history. In that case, they use the information included in your tradelines to calculate your creditworthiness. 

Payment history is the major contributing factor to your credit scores and it accounts for about 35% of your tradeline. If you have a high utilization then lenders can look at your tradeline to determine whether its a concern or not.

Why Would Someone Buy a Tradeline?

There are several reasons why you would purchase a tradeline:

  • If you have a thin file i.e., less than 5 credit accounts on your report
  • Your credit score is low
  • Your utilization is high
  • Or your average credit age is short

Let’s give a concrete example of why you would want to buy a paid tradeline

For instance, if you have a couple of missed payments on your credit report and need to improve your credit wordiness, buying tradelines could help boost your score. How? Because the tradeline with 100% on-time payment will help reduce the effect of the delinquency on your credit report.

Or say you have a high credit utilization rate and you’ve used 30% or more of your credit card tradeline, it can cause your score to drop. Paid tradelines for sale with a high limit can help increase your available credit, reduce your credit utilization, and therefore increase your credit score. 

Here’s an actual example. Let’s say your credit limit is $2,500 and you’ve used $2,000 of your credit limit. Your credit card utilization is 80%.

$2,000 / $2,500 =  0.80

Purchasing tradelines credit with a $7,500 limit will reduce the utilization to 20%. A lower utilization and could boost your credit score.

Note: buying tradelines does not replace practicing excellent credit habits to improve your credit score. In fact, you will get the most benefit from a paid tradeline if you continue to practice excellent credit habits and don’t have derogatory remarks on your credit profile in the last 12 months.

How is Tradeline Information Collected?

Creditors and lenders you have your credit accounts with send information to the credit bureaus on a monthly basis. The information transferred contains the most recent information from each of your tradelines. 

To stay updated on the information on your credit accounts, you can order your free credit reports. The federal law states that you are entitled to one free credit report per year from each of the major credit bureaus. To order it online, go to the Annual Credit Report website

Once you’ve received your credit reports, check them thoroughly for errors. Common errors include:

  • Misspelled name
  • Transposed date of birth
  • An address you never lived in
  • An account you never opened
  • Hard inquiry for a tradeline you didn’t apply for

If there are any, report to the credit bureau to get them removed. 

Keep in mind that tradelines you don’t recognize appearing on your credit reports is a sign of identity theft. They should be disputed with the credit bureau ASAP. 

When are Tradelines Removed?

There are typically only two ways tradelines are removed from your credit report:

  1. You dispute an open tradeline
  2. A closed account has been longer than 7 years

If you dispute a tradeline with the credit bureaus that shows up as open and they approve the dispute, the tradeline will be deleted from your report. You can use this process to remove incorrect tradelines or fraudulent tradelines from your credit report.
The other way tradelines get removed from your report is when a closed account is past 7 years. Based on the status of limitation, lenders or creditors are not required to report on the status of tradelines older than 7 years. However, they will usually keep the account on your report between 7 – 10 years.

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