What Are Tradelines and How Do They Affect Your Credit Score?

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Did you know that only 1.2% of the population has the elusive perfect credit score? Those with the perfect score tend to have more tradelines on their report but lower average debt.

Wait, what are tradelines?

A tradeline is a term used by credit reporting agencies to describe credit accounts listed on your credit report. Information about the creditor and the debt of each tradeline are included in your credit report for any accounts that you may hold.

Understanding how tradelines work can give you a better idea of how to read your credit report and what lenders see when they check your credit.

What Are Tradelines on Your Credit Report?

For each and every credit account that you have, there's a tradeline included in your credit report for it, whether it is revolving or installments. Revolving tradelines include credit cards and lines of credit. Installment tradelines include loans such as mortgages, auto loans, student loans, and personal loans.

Each tradeline on your report includes the history of that account. This is unless part of the history has aged off your credit report because there is a credit reporting time limit.

The tradeline will include the following:

  • Credit or lender's name

  • A partial account number

  • Type of account

  • Account opening date

  • Date of last activity

  • Current balance

  • Credit limit or loan amount

  • The amount of the last payment

  • The date the account was last updated

  • Payment history

  • Current account status

  • Any delinquencies in the past seven years

So that's what a tradeline is—but how exactly does it affect your credit score?

Affect on Your Credit Score

The tradelines on your credit report are just one of the factors that are used to determine your final credit score. If you have been a responsible payer of your installments and kept your balance low then you will have a good credit score.

To have a score generated for you by the credit scoring calculation, your report must have at least one tradeline that has been active for the past six months. It is also worth noting that the number of tradelines that you have active can affect your credit score. 

This is a little tricky to navigate as the credit scoring companies do not provide information on the optimum number of tradelines for excellent credit. The best plan is to open and close accounts as you need and keep your accounts responsibly with debt balances low. This is the way to maintain a great credit score. 

Can you have too many tradelines? The answer is basically yes. You can have a credit application denied for opening too many tradelines in the past 24 months. The same can happen if you opened tradelines too recently.

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So what are tradelines going to do to your credit? That answer ultimately lies with your payment behavior regarding them and how many you have.

The secret benefit of tradelines lies in understanding how they contribute to your credit report. By arming yourself with the knowledge of how tradelines work you can use them to positively affect your credit score. 

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