What Is a Tradeline?
Tradelines or AU tradelines are credit accounts that appear on your credit report. Credit agencies use the information within those tradelines, such as their payment history, balance, activity, and creditor’s name, to form your credit score.
Your credit score is a figure that measures how credit-worthy you are. If you have made payments on time, have been responsible with credit, and kept your balances low, then you may have a high credit score. Banks and lenders may then be more likely to look favorably at you for lending. However, if you have too many tradelines open or haven’t made the best decisions regarding your credit, your credit score may be low.
To combat a low credit score or build a positive payment history, you may decide to purchase tradelines. These can improve a low credit score and allow you to build up a payment history. As common as this practice is, it’s easy to make some of the following mistakes.
Mistake #1: Not Knowing How Tradelines Work
You may have heard that tradelines can improve your credit score. If you don’t know a lot more than that, it can be easy to purchase too many tradelines, the wrong ones, or be led into making tradeline purchases that aren’t in your best interests.
Mistake #2: Expecting Instant Results
When you add an authorised user tradeline to your account, you may think your credit score will immediately increase. You may then put plans in place to secure a mortgage or take out a loan. Tradelines are not instant. Instead, when you purchase an authorised tradeline, it can take up to 30 days to see an improvement, as long as you’ve selected one that can improve your credit score.
Mistake #3: Thinking Tradelines Repair Your Credit
Many people don’t understand their credit score. Sometimes, it’s only when you go to take out a loan that you come to realise it’s not as high as you expected it to be. If your credit score is surprisingly low, a tradeline is not a way to repair it. Instead, it’s a way to add information to your credit report to potentially increase your score. If you have a low credit score and you’re unsure why, you have the right to question it. You may be able to correct anything that appears to be wrong and subsequently lift your score.
Mistake #4: Adding Tradelines With Credit Freezes or Fraud Alerts On Your Account
If a credit bureau has put a fraud alert or credit freeze on your account, any tradelines you purchase will not be posted to your credit report. Before you go down the tradelines route, contact the associated credit bureau to have those alerts removed.
Mistake #5: Choosing the Wrong Tradelines
Each tradeline is going to have a different effect on each person’s credit report. Its power will depend on what your credit report already outlines. The goal is to choose a tradeline that has better features than what you already have. For example, if your accounts’ average age is eight years, a five-year-old tradeline is not going to benefit you as much as one that has an average age of 10 years.
When the time comes to request a loan or a mortgage, it helps to understand as much about your credit report as possible. You can then learn about ways to improve it, repair it, and use it to your advantage.