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Tradelines can stay on your credit reports for up to 10 years after you close the account.
However, suppose you have any negative remarks on the account, like late payments. In that case, the negative information falls off of your credit report seven years from the initial delinquency date.
A tradeline consists of any account that appears on your credit profile. This can include student loans, car loans, credit card accounts, etc.
Closing accounts as a method of credit repair often does not work because closed accounts are not removed from your credit reports. Some of the account information is removed, but the payment history on the account will still impact your credit scores.
Suppose you are trying to achieve a good credit score. It might be better to efficiently manage your existing tradelines and perhaps open new ones.
What Happens When You Add Tradelines to Your Credit?
Tradelines, and the information they contain, are key to calculating your credit score.
Each of the five main aspects of credit scoring, payment history, amounts owed, length of credit history, credit mix, and new credit are all dependent on the tradelines that appear on your credit report.
Adding a new tradeline will have an impact on your credit score. This impact could increase or decrease your score depending on the state of your credit.
Let’s take a look at some of the positive impacts first.
Say that you open a new revolving tradeline (credit card). If you keep your reporting balance low, this will positively affect the amounts owed portion of your score. This is because a big part of your amounts owed is credit utilization.
Credit utilization is calculated by comparing your available credit to your current balance. The lower the credit utilization ratio, the higher your credit score.
Payment history can also be positively impacted by a new tradeline so long as you make on-time payments each month.
Credit mix may also benefit. For example, if you only have revolving tradelines on your credit and you add an installment tradeline, then this will improve your credit mix and increase your score.
Unfortunately, a new tradeline will negatively impact the length of credit history and new credit. For example, hard inquiries will decrease your score a few points (new credit) and will affect the average age of account (credit history).
The one exception would be adding a rental or utility tradeline. These don’t require a credit check and can report up to two years worth of history.
How Long Do Bought Authorized User Tradelines Stay On Your Credit?
When you purchase or rent an authorized user tradeline, it will come with a limited window for having the account reported to your credit.
Often, a rented authorized user tradeline will report as active on your credit reports for a maximum of two months. After that two-month window, the account will be reported as closed.
Also Read: Rental Tradelines
If you purchase a seasoned tradeline, your score could initially go up a decent amount, perhaps even 100 points or more. But once the account shows as closed on your report, only the payment history will continue to be calculated in your credit scores.
The purchased tradeline could continue to appear on your credit reports for up to 10 years if it is not closed.
However, if the tradeline incurs a late payment, then it is required to be removed from your credit report within seven years from the delinquency date, per the Fair Credit Reporting Act (FCRA).
Can Tradelines Mess Up Your Credit?
All tradelines have the ability to mess with your credit score.
First, there is the issue of credit score decreases from new tradelines. Luckily, these issues are usually short-lived, and the new tradeline eventually improves your credit score.
Buying tradelines is another potential credit score disaster. While they may initially boost your credit by a significant amount, once they are reported as closed, a lot of their credit benefits go away, meaning your credit score could take a nose-dive.
And, if the primary account holder begins managing the account poorly, this will definitely harm your credit.
But the most significant way a tradeline can hurt your credit is if you choose to manage the account poorly. For example, incurring late payments or keeping your balance too high on revolving tradelines will decrease your credit score.
Downsides of Renting an Authorized User Tradeline
Credit piggybacking by renting authorized user tradelines allows you to take advantage of someone else’s good credit. For this reason, it is often a suggested action to take for credit repair.
But there are a lot of downsides to buying tradelines. Let’s take a look at the top three reasons why you should avoid renting authorized user tradelines.
Dependency on Someone Else
Would you hand a stranger $500 and ask them to keep it safe for you? Probably not. There is too much of a risk that they might lose or spend it.
The bad news with renting authorized user tradelines is that you are essentially doing this with your credit. You are putting the well-being of your credit in the hands of a complete stranger.
If the primary account holder begins racking up debt or misses a payment, this higher utilization and late payment will appear on your credit reports. And getting the information off your credit reports will be difficult.
Currently, buying tradelines is legal. Or perhaps it would be more appropriate to say that it is not illegal.
Selling tradelines is more of a gray area. While not technically illegal, it is against most credit card companies’ terms of service. When you sell an authorized user spot, you are committing fraud.
Both the FICO and the credit bureaus dislike this fraudulent practice. FICO has even started cracking down by revising its scoring models to exclude these authorized user accounts from score calculations.
It is also worth noting that while there are currently no laws forbidding the buying and selling of authorized user tradelines, several states are considering crafting laws to regulate this practice in the near future.
The cost of purchasing an individual authorized user tradeline can range from $200 to well over $1000. The price difference comes with the age of the credit account and the current credit limit.
What’s more, most tradeline companies suggest that you purchase multiple authorized user tradelines…as many as four to get the best results for your credit.
This means you could end up shelling out over $4,000!
With their short-lived nature and potential to not even help your credit score, buying authorized user tradelines is just not worth the price.
Tradelines You Can Buy that Are Legal and Effective
Buying authorized user tradelines is not your only option for purchasing tradelines. There are many other types of tradelines that you can buy, such as secured credit cards, credit builder loans, and more.
Even though you are legitimately opening these accounts, we use the term ‘buy’ because all of the accounts require an investment, like a security deposit or subscription fee.
Below are four of Digital Honey’s favorite, 100% legal, effective, and cheap tradelines.
CreditStrong and their credit builder loan have helped their average customer increase their credit score by 70 points within the first 12 months of the loan term.
And it’s even better news for those who start with no credit. After the same 12 month period, they can find their new credit score in the mid 600s!
CreditStrong is able to help their customers achieve these credit score milestones by adding an installment loan tradeline to their credit reports.
This installment loan is unique because it is a secured loan. But instead of a separate security deposit, the loan funds are locked away in a savings account to secure the loan. And with each payment, CreditStrong reports it each month to the credit bureaus, thus raising your score.
The total funds are returned to you at the end of the repayment term (minus any fees).
There is no credit check required to open a loan, and loan terms range from one year to 10 years. You can even close your account early if you choose to do so.
This credit builder loan tradeline will help you build credit for the duration of your loan term. Once it is paid off, the account will show as closed on your credit report but will remain there, impacting the payment history portion of your score for up to 10 years.
Self offers two different credit tradelines; a secured loan and a secured credit card.
The installment loan is secured by the loan funds themselves. Once approved, the funds are locked away in a savings account until the end of the repayment term.
Self offers these loans with repayment periods for up to two years. And a study of these secured loans has shown Self’s average customers see a credit score increase of 32 points.
Self’s secured Visa credit card requires you to first have the credit builder loan. This is because the unlocked portion (paid off) of your loan is used for the security deposit on the credit card.
Neither the loan nor the credit card will require a credit check. And by having both, you are adding two tradelines to your credit report, a revolving tradeline and an installment loan tradeline.
The loan will be reported as closed once paid off, but the credit card will remain open so long as you don’t cancel it. Managing both of these accounts well could result in a beneficial impact on your credit score for 10+ years.
Extra Debit Card
How would you like to build credit using a debit card?
Well, the good news is that Extra allows you to do just this.
The Extra card links directly to your checking account. Each time you use the card, Extra covers the purchase price. They then deduct the said purchase price from your checking account within the next business day.
Extra reports this purchase history as payment history to the credit bureaus at the end of the month.
The Extra card does not require a credit check; instead, they evaluate your expense/income history to determine your creditworthiness.
On your credit reports, Extra will appear as a revolving tradeline. In addition to this, your account opening date, “Spend Power” (credit limit), payment history, and most recent balance will also appear.
For their credit reporting service, Extra will charge you an annual fee of $149 for their Credit Building plan or $199 annually for their Credit Building + Rewards plan.
So long as you have the card open, the tradeline will indefinitely remain on your credit reports. If you close the account, it will not be able to impact your credit score as much, but will remain on your credit reports for several years.
Customer reviews on Extra report their scores increasing by 30 points or more
Boom offers a different type of tradeline, a rental tradeline. This type of tradeline is for reporting rental payments to your credit history.
While some landlords offer this service, many don’t. BoomPay offers to report your rent payments for you for a small fee.
BoomPay charges $2/month for the rent reporting service and an additional $25 if you want your past payment history (up to two years) reported.
This rental tradeline will appear on all of your credit reports. Depending on the current state of your credit, it has been known to help individuals increase their credit score by up to 100 points.
Not everyone will benefit from rent reporting. Some customers only see a 10 point increase or might even see a score decrease when this tradeline begins reporting.
It is also worth noting that not all scoring models include rental tradelines in credit score calculations.
Once you stop using the rent service or move, the rental tradeline will appear as closed on your credit reports.
You also can cancel the service and have your rental credit history wholly removed from your credit reports.
The Boost tool by Experian offers a unique type of tradeline, utility payments. Like your monthly rent, utility payments are generally not reported to the credit bureaus.
Experian BOOST™ lets you add utility payment tradelines to your Experian credit report for free.
Utility tradelines can consist of:
- Utilities: gas, electric, etc.
- Communications: internet and phone
- Entertainment services: cable and streaming (i.e., Netflix)
Adding these tradelines has allowed the average consumer to increase their credit score by 12 points. Although not everybody will see this large of an increase, some may see a slight decrease.
One upside in preventing score decreases is that Boost will only ever add positive payment history to your Experian credit report. So, if you have any missed payments, these will not be added to your credit report.
Also, if you don’t like the results of using Boost, you can have these utility tradelines entirely removed from your credit report. Otherwise, they will remain on your credit report, even after you close the accounts (i.e., switch utility providers).
When you have bad credit because of negative information on closed accounts, you may be anxious to get the tradeline removed.
Unfortunately, true credit repair is a process and negative information will remain on your credit report for seven years, damaging your credit scores.
While you wait, you can take other steps like opening new primary tradelines in order to achieve good credit.
Read the other articles in our tradeline series:
- How Much Will a Tradeline Boost My Credit?
- Authorized User Tradelines
- How to Get a Free Tradeline
- The 3 Types of Tradelines
- Buy Credit Tradelines
Amanda Garland is a personal finance blogger living in Dallas, TX. 10 years ago she was living paycheck to paycheck and knew nothing about how credit works. She learned some hard lessons in her fight for financial stability. Now she has a friendly competition going with her husband to see who can reach a credit score of 850 first. She is also a poet, having obtained a Bachelor of Fine Arts degree in Creative Writing.