Trade Line: Definition, How It Works, and Included Records (2024)

What Is a Trade Line?

A trade line is a record of activity for any type of credit extended to a borrower and reported to a credit reporting agency. A trade line is established on a borrower’s credit report when a borrower is approved for credit. The trade line records all of the activity associated with an account.

Comprehensively, trade lines are used by credit reporting agencies to calculate a borrower’s credit score. Different credit reporting agencies give differing weights to the activities of trade lines when establishing a credit score for borrowers.

Key Takeaways

  • A trade line is created on a borrower’s credit report to keep track of all the activity on the account.
  • A trade line is created for every line of credit or account a debtor has such as a mortgage, car loan, student loan, credit card, or personal loan.
  • Trade lines include information on the creditor, the lender, and the type of credit given.
  • A closed credit account will generally remain on a trade line for seven to 10 years.
  • A trade line includes all relevant information used to determine your credit score. It is important to review your trade line to ensure all information is valid and free from error.

How a Trade Line Works

A trade line is an important record-keeping mechanism that tracks the activity of borrowers on their credit reports. Each credit account has its own trade line. Borrowers will have multiple trade lines on their credit report, each representing the individual borrowing accounts for which they have been approved.

The basic types of accounts that have a trade line are those paid off in fixed installments, and these accounts are often broken into categories. First, revolving trade lines are reported on credit cards or other lines of credit. Second, installment trade lines report the history of car loans, mortgages, student loans, and personal loans. Open accounts, a third type of account on a trade line, are often associated with businesses as opposed to individuals.

Records Included in a Trade Line

Trade lines may contain a variety of different data points related to the creditor, the lender, and the type of credit that is being provided. The trade line often contains the name of the creditor or lender, the account or another identifier for the type of credit being provided, the parties responsible for paying the loan, and the payment status of the account.

The trade line will also contain particular account milestones, such as the date the credit was extended, the credit limit, the payment history, all levels of delinquency if any missed payments have occurred, and the total amount owed as of the last report. If a consumer closes an account, that account will typically remain on his or her credit report as a trade line for seven years, though in some cases the account can go away sooner.

Payment status indicates whether or not payments for the loan are being made on time and how late they are if they are not being made on time. If the payments are being made on time, the payment status will indicate that the payments are being made according to the terms of the credit agreement.

The information included in your trade lines is used to calculate your credit scores. While your credit score is a summarized snapshot of your creditworthiness, lenders may inquire to see a detailed report of your entire trade line.

Special Considerations

Late payments are usually grouped in a range of days according to how late they are. For example, delinquencies may be reported as 30 days late, 60 days late, or 90 days late. The payment status may be set to “charge off” if the creditor deems it unlikely that the debt will be repaid, and the status may also indicate that the credit recipient has entered bankruptcy.

As trade lines are used by credit reporting agencies to develop an individual’s credit score, credit scores vary, with higher scores generally given to individuals with more-favorable trade line reporting. Factors considered when calculating the credit score include the number of trade lines, types of trade lines, lengths of open accounts, and payment history.

In addition to reviewing a borrower’s credit score, a lender who pulls data from a credit-reporting agency may also comprehensively analyze all of the trade line reporting on a credit report when considering a credit application in the underwriting process.

FICO Credit Score

When applying for credit, your lender will often request your credit score as part of the approval process. Your FICO score is directly determined from the information listed on each trade line. Below is how your FICO score is calculated and how each section relates to trade lines.

  • Payment History (35%): Trade lines include debt or lines of credit that have been closed for up to 10 years.
  • Amounts Owed (30%): Trade lines are created for every line of credit. Each line of credit, revolving line, or installment agreement has its own trade line.
  • Length of Credit History (15%): Trade lines include every payment you've ever made against every account or line. This also includes every installment payment you've missed.
  • New Credit (10%): Trade lines are generally created within a month of the first payment being made on the associated line or account.
  • Credit Mix (10%): Trade lines are created for a variety of types of accounts including mortgages, car loans, credit cards, student loans, and personal loans.

What Is a Trade Line?

A trade line is a summary on every revolving or installment credit you have. This detailed report outlines your creditworthiness by communicating to creditors and lenders your payment history, your credit history, and your delinquencies.

What Is an Example of a Trade Line?

A trade line is created for every credit line you own. An example of a trade line is your car payment history. When you begin repaying a car loan, a trade line is created that summarizes your contact information, your current payment status, the date the line of credit was opened, and the date the line was closed.

The trade line will also report current information such as the date of your last payment, the current balance remaining, and your monthly payment amount.

Can Trade Lines Hurt Your Credit?

Yes, trade lines communicate to lenders your prior creditworthiness and details how much debt you have, what your current minimum monthly payments are, and what your historical payment delinquencies are.

How Do You Get a Trade Line?

A trade line is automatically created for you when a new line of credit is started. For example, when you sign up for a new credit card, a new trade line is created specific to that individual line of credit. As you incur purchases on the card and pay off debt balances, a record of history is created.

How Long Do Trade Lines Last?

Trade lines may show up on your credit report as soon as 15 days after the time of purchase. Alternatively, a trade line may be delayed on showing on your report up to 45 days depending on the timing of the purchase.

Each credit reporting agency may have varying terms on how long a trade line is maintained. In general, a trade line is often maintained on your account 10 years after the trade line has been closed. Trade lines with a negative history are generally closed between seven to 10 years.

Trade lines for fraudulent or erroneous reports can be disputed. After credit bureau agencies receive valid proof, these trade lines are often removed within 30 days of review.

Trade Line: Definition, How It Works, and Included Records (2024)


Trade Line: Definition, How It Works, and Included Records? ›

A trade line is a record of activity for any type of credit extended to a borrower and reported to a credit reporting agency. A trade line is established on a borrower's credit report when a borrower is approved for credit. The trade line records all of the activity associated with an account.

What is a tradeline and how do they work? ›

A credit tradeline is the industry term for an account included on your credit report. Each individual account, whether it be a credit card or loan, appears as a tradeline and is reported to the major credit bureaus, which are Experian™, Equifax® and TransUnion®.

How long do tradelines stay on your credit report? ›

Tradelines stay on your credit reports as long as accounts are active. Closed accounts in good standing remain on your report for up to 10 years. Tradelines with negative history that are closed remain on credit reports for seven years.

What can I get with a tradeline? ›

Mortgages, personal loans and student loans are examples of installment tradelines. With this type of account, you borrow a lump sum. Then you generally make fixed-interest monthly payments for the life of the loan.

How do I add tradelines to my credit report? ›

Quite simply, credit accounts can often have more than one authorized user. If you ask someone you have a trusting relationship with to add you to their account as an authorized user, the tradeline will be added to your credit report. This means you can benefit from the other person's positive repayment history.

Do you have to pay tradelines every month? ›

Types of Trade Lines

These include: Revolving: A line of credit or credit card. Installment: Mortgages and car loans that you pay back over time without being able to automatically borrow again. Open trade lines: Types of credit accounts that must be paid back in full every month, such as your rent.

What happens when you add a tradeline to your credit report? ›

They typically include details like the date the account was opened, current payment status and whether you've paid on time or been delinquent. In addition to making up a large part of your credit reports, those tradelines provide much of the data used to create your credit score.

How fast will a tradeline boost my credit? ›

Seasoned tradelines are considered to be the best tradeline. It can significantly affect your credit score because of its credit history. A report by Finance Monthly states that purchasing 2-3 seasoned tradelines can help increase your credit score by 720-850 in just one month.

Is it worth getting tradelines for credit? ›

While buying tradelines may provide a quick boost to your credit scores, it also comes with risks and potential downsides. There's no guarantee that paying for tradelines will improve your credit scores, and it will likely be more expensive than doing it yourself.

Will adding a tradeline increase credit score? ›

Tradelines play a key role in determining your credit score. Depending on your tradelines, it can either help improve your score and make life easier or otherwise. Adding someone with positive credit history as an authorized user (AU) can give you a better credit score and mutually benefit the two of you.

Why do people use tradelines? ›

Each tradeline includes detailed information about that account, including payment history, both positive and negative. Those details are used to calculate your credit score and to help lenders decide how risky it would be to lend you money.

How much do tradelines cost? ›

Some companies claim to offer tradelines in the low hundreds or on a low monthly installment plan. Some companies offer them for sale for over $2,000.00 each. Tradelines under $200.00 are not really realistic as the cardholders usually get paid about this much.

How many points can a tradeline add? ›

Mortgage brokers, lawyers and real estate agents have been using this practice for years to get their clients better rates and lower payments. The amount of trade lines you purchase will determine the approximate increase in your credit score. Usually buying one trade line will increase your score 40-45 points.

Can lenders see tradelines? ›

Because a credit score is just a snapshot of your creditworthiness, however, lenders may also check the tradelines on your credit report to get more information. If you're behind on payments with a certain account, for instance, a lender might check the tradeline to find out how long the account has been delinquent.

How many tradelines should I have to build credit? ›

There is no perfect number of tradelines, but if your goal is to build business credit, you will probably want to make sure your business credit report lists at least two to three accounts reporting to business credit bureaus.

Can I add a tradeline to my LLC? ›

You can get tradelines by opening accounts with companies that report to the business credit bureaus. Credit cards, loans,leases, and lines of credit can add financial tradelines to your credit reports.

How much does a tradeline boost your credit? ›

Positive Impact: Tradelines with a positive payment history on accounts in good standing can be beneficial. They can Increase the number of credit lines you have, which factors into your credit mix (10% of your score). Lengthen your credit history, especially if the tradelines are seasoned accounts (15% of your score).

Are tradelines good for credit? ›

Paying a stranger to add you as an authorized user on their credit card may seem like a good way to build credit. But the practice of buying tradelines is considered to be deceptive by creditors, and it may not have the impact you're hoping for.

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