Tradelines are any credit accounts that show on your credit report. These include personal loans, auto loans, credit cards, mortgages, and more. Adding tradelines to your credit history could create a credit score increase of 20 to 100 points.
It does this by affecting credit score factors like your payment history, credit utilization, and length of credit history. Renting or buying tradelines is marketed as a way for consumers with bad credit to increase their scores fast. But it’s not always safe and it doesn’t always work.
Fortunately, buying authorized user tradelines isn’t the only way to add new tradelines to your credit reports.
In this article, we’ll cover the specifics of tradelines and the legal ways you can build good credit.
What Happens When You Add Tradelines To Your Credit?
When you add a tradeline to your credit, a few things happen. Most of it is behind the scenes with the credit bureaus while your credit scores are calculated. The first thing you’ll likely notice is a hard credit inquiry.
It sticks around on your credit report for two years whether you get approved for the account or not. It also drops your credit score by about one to five points. No big deal.
Once you get approved, the following things take place:
- Your average age of accounts might drop with the addition of the new credit account. This might not be the case with an authorized user tradeline since you’d go for an account holder with a longer credit history than your own.
- Adding a revolving tradeline, like a credit card account, will decrease your credit utilization ratio by increasing your overall credit limit. If you had a high utilization rate before the new credit limit, it will increase your available credit. This raises your credit scores.
- It creates a new pathway for positive payment history. With previous credit accounts, you might have had a history scarred by late payments. A new tradeline means a fresh start to make on-time payments for your new account. A long stretch of good payment history works wonders.
All three of these factors make up the largest parts of your credit score. Ultimately the impact of a new tradeline on your credit profile will depend on what’s already on your credit report.
Is It Legal To Buy Authorized Tradelines?
Technically, there are no federal laws against buying tradelines. It’s sort of a legal gray area at this point. Adding an authorized tradeline to your credit report can help you increase your credit scores. However, it’s only temporary. So it’s no substitute for good credit habits.
Buying tradelines is openly discouraged by credit reporting agencies, lenders, and credit card companies. Some credit card issuers even include clauses in their user agreements that prohibit their account holders from selling authorized user tradelines.
A primary cardholder who gets caught selling tradelines on their own or through a tradeline company risks having their credit line closed for violating the terms of agreement.
Most lenders view purchasing seasoned tradelines as a misrepresentation of your credit history. This is because credit piggybacking uses someone else’s excellent credit history to improve your own. It’s deemed a deceptive practice that may result in fraud charges against you.
Recently, the Federal Trade Commission (FTC) settled a court case with the tradeline company, BoostMyScore. The company was required to pay a fine to the FTC and isn’t allowed to sell authorized user access any longer.
So while it’s not illegal to buy and sell tradelines yet, it’s highly discouraged, risky, and prohibited by many credit card companies.
Legal and Effective Tradelines
Legal tradelines don’t require you to fly under the radar and are much easier to come by. They’re way less expensive. Each credit reporting agency actually likes them. The best part is, they’re all yours. Personal tradelines are much more effective than user tradelines.
They might not be a lightning-fast credit score boost, but it is a long-term solution. And it offers the chance for the same big credit score improvements that lead to a good credit score.
If you’re on the credit repair journey and still have bad credit, you might think there aren’t credit repair options available to you, but that’s not true. There are credit tradelines you can use to help you build credit. Here are a few solid accounts that build credit to beef up your credit report.
Here are also some options for building your credit:
- Get a secured credit card. This is the best credit card for people with bad credit. It uses a security deposit from the cardholder as the credit limit for a revolving credit card account.
- Use Experian Boost. Boost credit scores with rent and utility payments.
- Open a credit builder loan with CreditStrong. An affordable loan that helps you build credit while saving money. They report to all three credit bureaus.
- Credit building debit cards. These debit cards track your spending and bill payments as an alternative way to build credit without a credit card.
One of the most effective credit-building tactics here is the credit builder loan from CreditStrong. While the debit cards and Experian Boost raise your score by a few points at most, this one has a bigger impact.
Why? Because it shows as an installment loan on your credit report and increases your credit mix.
CreditStrong has affordable credit builder loan options for personal and business credit. You don’t need a credit check to be approved and the process takes less than five minutes to finish. If you’ve struggled to find credit repair solutions that work, then it’s time to try CreditStrong.
Ready to start seeing your credit scores improve? Find out if you qualify for a credit builder loan today!
How Many Credit Tradelines Should I Have?
The number of credit tradelines needed to have a positive impact on your credit scores is about two to three. This makes a more established credit report and will likely raise your credit score. Without a healthy number of tradelines, you’d be considered to have a thin credit file.
You can change this by asking a friend or family member to add you as an authorized user to their credit card. As long as they have low credit utilization and a good payment history, the user tradeline should help your credit scores.
You could also take one of the routes mentioned earlier, such as a secured credit card or credit builder loan. Buying authorized user tradelines is expensive and risky. Avoid doing this at all costs.
Overall, the tradelines on your credit report should be an accurate representation of your creditworthiness. Having primary tradelines is the most effective way to build your credit.
New credit gives you fresh payment history, lowers your utilization rate, and impacts your age of accounts. Authorized user tradelines are more trouble than they’re worth due to the risk of fraud.
CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.