To explain it simply, trade lines are credit accounts that you use to make purchases. They are known as tradelines as they offer you lines of credit. If you have several revolving and installment credit accounts, each of these will have a separate trade line. The information about your credit usage with these accounts gets relayed by your creditors to the three credit bureaus, and it will appear in your credit report. Depending on how you have used the credit and what the condition of the credit account it, you will get a high or low credit score.
Tradelines on Credit Reports
If you have any credit cards and lines of credit, these will be in your revolving trade lines. On the other hand, your installment trade lines will include your personal loans, mortgages, student loans, car loans, and any other loans. Usually, unless there is a time limit for credit reporting, the tradelines on your credit report will provide details of the account’s credit history.
Both the revolving and installment trade lines will include the following information about your account:
• Creditor or lender’s name and address
• Account type
• Partial account number
• Account current status
• Opening date of account
• Closing date of the account, if applicable
• Last active date of account
• Account current balance
• Account credit limit or loan amount
• Account monthly payment
• Credit card recent balance
• Account payment history
• Payment failures in the past seven years
Creditors and lenders provide the most recent information about your accounts to the three credit bureaus. However, as they may all make different reports, you are likely to see variations across your tradelines.
How Tradelines Impact Your Credit Score
The three credit bureaus—Experian, Equifax, and TransUnion—use the tradeline information in your credit reports to calculate your credit score. For this, you must have at least one active tradeline that shows usage for the past six months. If you have more than one tradeline, they will all contribute towards your credit score.
Creditors and lenders, however, will not stop at checking only your credit score when they are considering you for credit or a loan. A credit score only offers an overview of how financially trustworthy you are. Most creditors and lenders will want to get additional information by checking your tradelines on the credit report.
Each tradeline will show the creditors and lenders if you have been behind payments on that account, and for how long. If you have a high credit card usage and your credit score has slipped because of that, the creditor will compare the balance and the credit limit to determine if you are likely to be a credit risk.
A tradeline will appear on your credit report only as long as you are an authorized user on that credit card. If you remove yourself from the credit account, the tradeline will no longer be on your credit report. You should carefully consider your removal, however. Because if the tradeline’s positive information has been boosting your credit score, it will no longer do so, and your score may even go down. On the other hand, if there were issues with high utilization or making timely payments, you will benefit from cutting off that tradeline.
It is essential to check the tradelines on your credit reports regularly to make sure that all the information is accurate and that there are no errors or false entries. You are legally entitled to get a credit report every 12 months from each of the three credit bureaus, and you should make a point of getting them. Experian also offers you free credit monitoring and access to updated credit reports every 30 days.
By checking the credit reports regularly, you may be able to spot inaccuracies and file disputes with the credit bureaus to remove them and prevent them from damaging your credit score.
You need to keep in mind, though, that tradelines are only one factor in the calculation. Your credit score will also depend on whether you have kept a low debt balance on your credit cards and if you have been making timely payments on your loans.
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