What are tradelines, and how do they impact my credit score?


LevelCredit LevelCredit


18 September 2019

A tradeline refers to any open account that shows up on your credit report. Here's how to make them work in your favor.

A "tradeline" refers to any open account that shows up on your credit report. Adding a new tradeline with positive information is one of the most underrated ways to help boost your score.

To make tradelines work in your favor, it’s helpful to understand what data is included in a tradeline:

Basic account details: This includes the name of the account, address/contact information for the creditor or lender and account number.

Type of account: This is where your credit mix comes in, as about 10% of your credit score is influenced by the types of credit accounts you have open. These include:

  • Open revolving accounts, like retail or bank-issued credit cards, where a balance is carried month-to-month.
  • Installment accounts, which are loans where a fixed rate is paid monthly for a predetermined period of time, such as a mortgage payment, student loan or car loan.
  • Open accounts, which is the least common type and is like a hybrid of revolving and installment: the balance varies month-to-month, but it’s always due in full. Examples of this type of account include utilities and check cards.

Account ownership indicates who is responsible for payment. There are a few different categories:

  • Individual, when the account is in your name only.
  • Joint, when you and another person (i.e. your spouse) are both responsible for payments.
  • Authorized user, which is when a credit card is in your name but you’re not ultimately responsible for payments.
  • Cosigner, when you’re responsible for someone else’s account if they don’t pay.

Payment terms and status, which dictates and reveals how you pay your bills. Best case is “pays as agreed” (on-time), with late payments starting at 30 days and continuing to 60, 90, 120, 150 and 180. After that six-month mark, most creditors will close the account as a charge-off, meaning they assume you’re never going to pay. (With some types of debt, like mortgage loans, that write-off timeline might kick in sooner, after the 120-day mark.) Altogether this reveals your payment history, which can appear on your credit report for up to seven years.

Key account dates or those milestones on the account such as the date it was opened or closed, as well as the date reported (last date the item was reported or updated on your credit report).

Additional credit information, including credit limit and balances owed.

Now that you understand what a tradeline is, and how it relates to your credit score, you can see how important it is to add your responsible rent payments as a tradeline with all three credit bureaus.

Having more tradelines on your credit report doesn’t always result in a higher credit score, depending on what that tradeline reveals about your financial habits.

However, people who have several active tradelines in good standing (no missed payments or maxed out credit), including a good mix of credit account types and lengths (ideally open for at least two years), end up having higher credit scores. Reporting your rent payments with LevelCredit can bring you closer that goal.