The 3 Types of Tradelines in Credit

There are many types of tradelines that appear on your credit reports. A credit tradeline consists of any account you have with a lender or service provider. This can include credit cards, loans, and utility payments.

Managing these tradelines well contributes to good credit. So if you have bad credit, taking a hard look at the type of tradelines you have and how to improve them can put you on the path towards a good credit score. 

Types of Tradelines

Any account that appears on your credit reports is a tradeline. 

Not all credit tradelines are weighed the same for scoring calculations, and not all tradelines report the same information. 

Additional information can appear on your credit report that is not considered a tradeline. This includes collections, credit inquiries, bankruptcies, etc.

In general, there are three main types of tradelines. Below, we will explore what they are and how they impact your credit. (Also see our What Are Tradelines? article for more on this.)

1. Revolving Accounts 

A revolving tradeline consists of any type of revolving account. This includes secured credit cards, unsecured credit cards, and other lines of credit (eg, traditional bank lines of credit, PayPal Credit, etc.).

Each revolving account reports key information that impacts your credit. 

1. Account opening date: impacts the length of credit history
2. Payment history: affects the payment history portion of your score
3. Credit limit: used to calculate available credit
4. Balance: key for calculating your credit utilization

One of the unique features of revolving accounts is credit utilization. This is calculated by comparing your balance to your credit limit. This calculation impacts the amounts owed portion of your credit score. 

It is worth noting that some revolving accounts, i.e., credit building debit cards, don’t always report a credit limit, meaning they won’t affect credit utilization.

2. Installment Loans

An installment tradeline consists of any type of installment loan. This can include:

• Credit builder loans
• Auto loans
• Mortgages
• Student loans
• Personal loans

Common types of loans that aren’t reported include title loans and payday loans. 

An installment tradeline reports set information that can impact your score in multiple ways: 

1. Account opening date: impacts the length of credit history
2. Payment history: affects the payment history portion of your score
3. Original loan amount and current balance: impact the amounts owed part of your score 

Installment credit lines are also a key factor in the credit mix portion of your score. To achieve the best score, you need a mix of revolving and installment tradelines. 

3. Other

Most credit tradelines fall under the installment or revolving tradeline umbrellas, but there are a few additional tradelines that can appear on your credit. 

Rental history is one. Rent payments aren’t usually added to your credit reports, but some landlords offer this service. Additionally, many third party companies will report your rent payments for a small fee. 

Utility payments are another potential tradeline. But, again, these usually only get added to your reports if you use a third party reporting service. The exception is Experian BOOST^™, which will report utilities and other tradelines like internet and streaming services. 

These other types of tradelines will impact your credit in two key ways; length of credit history and payment history. However, they do not impact the amount owed portion of your credit score.

Primary Tradelines vs. Authorized User Accounts

A primary tradeline is an account in your name, meaning that you opened the account. This can include accounts you open as a joint account holder or a cosigner. 

Authorized user accounts are ones where you are added as a non-fiscally responsible user to someone else’s account. Non-fiscal means that you can charge on the account, but you are not liable for repayment. 

Becoming an authorized user is limited to credit cards. 

In addition to how these two different types of tradelines work, there is a big difference in how they report to the credit bureaus and how they can affect your score.

Primary accounts:

1. Are weighted more heavily
2. Impact all aspects of your credit
3. Are always included in credit score calculations

Authorized user accounts:

1. Are not weighted as heavily
2. Often only impact payment history, credit utilization, and length of credit history
3. Are sometimes excluded in credit score calculations

It is also worth noting that closing primary tradelines will, in most cases, have a bigger impact on your credit score than closing authorized user tradelines. 

Are Authorized User Accounts Legal?

Becoming an authorized user on someone else’s account is perfectly legal. 

This action is most often taken on behalf of children or spouses, usually as a way to help them build credit or to give them a payment method to use in emergencies. 

Still, anyone can become an authorized user. For example, a parent, sibling, or even a friend can be added as an authorized user. You can often even have multiple authorized users on one account. 

Before adding an authorized user, you must check with your credit card issuer. Some credit card companies have specific limitations and requirements, including:

• A minimum age for authorized users
• A limit on the number of authorized users
• They must live in the same household
• A fee for adding an authorized user 

Unfortunately, authorized user accounts are abused. For example, in a practice called credit piggybacking, a person actually purchases an authorized user slot on someone else’s credit card.

While there is nothing illegal about selling tradelines, it is frowned upon. It often violates a credit card’s terms of service, resulting in account closure and is considered fraud. Newer FICO scoring models exclude these accounts from credit score calculations.

What are Seasoned Tradelines? 

A seasoned tradeline is an authorized user account that is old. The older, the better. These seasoned tradelines also usually have higher than normal credit limits. i.e. $10,000 versus $500. 

The term “seasoned tradeline” is most often used in the world of credit repair and buying tradelines. So if you hear the phrase, be on your guard. Someone is likely trying to sell you