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3 Ways You Can Add Tradelines to Your Credit Report
Tradelines are types of accounts that appear on consumer credit reports. The three primary credit bureaus are Experian, Equifax, and TransUnion. Lenders usually report tradelines automatically after a consumer opens a credit card, auto loan, or other account.
The tradelines that compose your credit history report influence your three-digit credit score. Scores range from 300 (poor) to 850 (excellent).
Get Credit Accounts
Among the most common types of tradelines are revolving accounts and installment accounts. Credit cards are examples of “open-ended” revolving accounts with some flexibility.
For example, credit cards are used for making purchases of goods or services. The balance is then repaid in a series of payments.
Installment accounts are often categorized as “closed-end” credit accounts.
An auto loan is a common type of installment account that involves a single loan for a vehicle. Student loans and mortgage loans are other examples.
Consumers seeking a loan specifically for creating tradelines to build credit should know that some lenders might not report account information to credit bureaus. Because of this, it is important to check with the lender to make sure that they report to the bureaus.
Lesser-known alternatives exist beyond the primary tradelines derived from establishing credit accounts. One example involves being added as an authorized user on someone else’s credit card account.
The process of obtaining authorized user tradelines is sometimes called “piggybacking.” These arrangements are most common among family members or close friends.
Keep in mind that each individual credit account generates an independent tradeline entry. Updates occur for credit report entries as details change. Examples might include current balances and ongoing payment history.
Accounts remaining in “good standing” generally have a positive impact on your credit. However, late payments and delinquent accounts have the opposite (negative) effect.
Report Your Bills to the Credit Bureaus
Consumers now have some alternative methods that will boost credit. This option is reporting the account activity of monthly bills such as rent or utilities. For example, the credit bureau, Experian, now offers a BOOST program.
Experian BOOSTTM creates a free tradeline entry for each eligible account. It includes video streaming services, gas or electric bills, and even rent.
Consumers will provide access to bank account information to allow for tracking transactions. Rent reporting services are a viable option for creating rental tradelines. All three major credit bureaus will include rent payment information—if properly provided.
Some of the rent reporting services might only report to one or two of the major credit bureaus. Experian is also now promoting an Experian RentBureau® program. The program uses a database containing rental information of more than 20 million Americans.
Property management companies and landlords might also use these database resources. The database allows for new rental applicant screening before entering a lease agreement.
Rent reporting and other bill reporting methods can typically benefit your credit. Yet, the opposite effect might occur when payments are delinquent.
Get Credit Builder Accounts
Many banks and other financial institutions today promote “credit builder” options. These are products that may appeal to consumers with poor credit. Credit builder loans are often forms of installment loans ranging from 12 to 24 months or more.
Often, the loan funds remain secured in a designated account throughout the loan term. All payment activity is then reported to the credit bureaus like a traditional installment loan.
The Consumer Financial Protection Bureau (CFPB) found that borrowers without debt saw the most benefits. Those with no credit history experienced a large increase in their credit score.
Credit-building accounts allow borrowers opportunities for demonstrating financial responsibility through consistency. This should come as no surprise when looking at the factors that influence your credit score.
The most widely used model for calculating consumer credit scores is from the Fair Isaac Corporation (FICO). FICO developed a standard for assessing creditworthiness summarized in the following chart.
FICO Calculation (Factors)
|Length of Credit History||15%|
|New Credit Accounts||10%|
|Credit Mix (types of accounts)||10%|
Credit builder accounts can improve your payment history (35%), credit mix (10%), and your length of credit history (15%).
Is It Legal to Add Tradelines?
Yes. Adding tradelines represents a viable means of building credit. However, some organizations “rent” tradelines, which is a rather controversial and deceptive practice.
Some sources referred to this process as “for-profit piggybacking.” With the FICO 8 model, the organization made some changes that account for this form of “tampering.”
Certain for-profit tradeline strategies represent a “grey area.” Experian suggests that consumers use caution when purchasing tradelines. They expressed particular concern when “piggybacking on a stranger’s credit card.”
How Much Does It Cost to Add a Tradeline to Your Credit?
With many different ways of adding tradelines, the cost of doing so might vary widely. For example, some free bill reporting options exist and others might cost only about $3 per month.
Experian’s BOOSTTM program is now promoted as a free feature. BOOST allows consumers to report their utility bills, telecom accounts, and others. Keep in mind that BOOST requires all consumers to maintain at least one active credit account.
Consumers should also proceed with caution in the realm of credit repair companies. Experian found that some monthly subscription fees reached approximately $75.
Is It Good to Add Tradelines to Your Credit?
Yes. Adding tradelines is inherently a key for consumers seeking to develop good credit. The two primary credit scoring models are FICO and VantageScore. Both of these models use tradeline information for calculating scores.
Those who establish tradelines with creditors must strive to remain in good standing. Consumers with good credit usually obtain credit approval and pay lower interest rates. And you might even save money on your car insurance premiums.
Remember that negative tradeline entries will hurt your credit. Always avoid late payments on all accounts.
How Fast Do Tradelines Work?
Tradelines will generally appear on consumer credit reports within 15 to 45 days. The specific time frame varies based on the circumstances.
Keep in mind that tradelines often become increasingly impactful over time. “Seasoned” tradelines over two years old have the strongest positive effect.
Anthony Amodeo is a regular finance writer in both business-to-business and business-to-consumer industries. Particular areas of focus include personal finance, small business, real estate, and more. He is a graduate of Kent State University. His credit scores are top tier.