If you’re new to building credit, terms like “tradeline” can make it hard to understand how things work. Simply put, a tradeline is an account that’s listed on your credit report. This can include credit cards and loans, like an auto loan or a mortgage. Tradelines include details about the account, like your payment history, which helps lenders determine your creditworthiness.
Understanding how tradelines work can help you successfully manage your credit. To get you started, let’s explore what credit tradelines are and why they matter for your credit score.
What is a tradeline?
A tradeline is a record of an account that appears on your credit report. Tradelines can include open and closed lines of credit and loans, like credit cards, mortgages and personal loans.
Tradelines generally appear in the “accounts” or “satisfactory accounts” section of your credit report. Depending on your credit history, tradelines may also appear under “adverse credit,” “collections” or “public records.”
Some of the information that may be listed under a tradeline includes:
- Lender name
- Account type and status
- Account opening and closure dates
- Current balance
- Original balance or credit limit
- Monthly payment amount
- Payment history
How do tradelines work?
Tradelines act as a record of your credit accounts and how you manage them. That information can be used to help evaluate your creditworthiness when applying for new credit. Your tradelines include accounts in your name, but they can also include accounts where you’re an authorized user or cosigner.
Each lender decides what information to provide to the credit bureaus, so the information included can vary from tradeline to tradeline. Some lenders may only report to certain credit bureaus, so not every account will appear on all your credit reports.
Credit scoring models use tradeline information – along with other details in your credit report – to help calculate your credit score. For instance, on-time payments can help improve your credit score while missed payments or using a large portion of your available credit can negatively impact your score.
Types of tradelines
Tradelines can include several types of accounts:
- Revolving credit: Credit cards and lines of credit can appear on your credit report, whether you’re the primary cardholder or an authorized user.
- Installment loans: Loans that require monthly payments for a fixed term, like a personal loan or mortgage, typically report your activity to the credit bureaus.
- Utilities or telecom accounts: If these accounts are reported to the credit bureaus, they can appear as tradelines in your credit report. It’s less common to see these, and you may have to opt into a reporting service.
Closed accounts, bankruptcies and accounts sent to collections may also appear in your credit report. Closed accounts in good standing can stay on your report for 10 years while closed accounts in poor standing may stay on your account for 7 years.
Why tradelines matter for your credit score
Tradelines play a major role in calculating your credit score. Credit scoring models use information from those accounts to help evaluate your creditworthiness, which can include:
- Payment history: Creditors can report your payments, including on-time and late payments.
- Credit utilization: Your account balance and credit limit on revolving credit accounts can also appear under tradelines. Those allow credit scoring models to calculate your credit utilization, or the percentage of available credit you’re using.
- Length of credit history: The age of your credit accounts informs the length of your credit history. Scoring models may factor in things like the age of your oldest account and your average account age.
- Account mix: Lenders like to see that you can manage multiple types of debt, such as loans and credit cards.
Tips for managing your tradelines responsibly
Tradelines have a big impact on your creditworthiness. That's why it's important to use responsible credit habits to protect your credit score, such as:
- Paying bills on time: Payment history has the biggest impact on your credit score, so it’s important to consistently pay your bills on time. Setting up autopay can help make paying your bills on time easier.
- Keeping your utilization low: A lower credit utilization ratio is generally better for your credit score. Try to keep your balances low and consider keeping unused or less-used credit cards open so you don’t reduce your available credit.
- Keeping older accounts open: Closing older credit cards may shorten your credit history and increase your credit utilization. If there’s no annual fee for an older credit card, it may make sense to keep that account open.
- Checking your credit report: Regularly reviewing your credit reports can help you find areas of improvement and catch mistakes that may bring down your credit score. You can get a free annual credit report from each of the 3 consumer credit bureaus. They may also offer free weekly credit reports. If you find a mistake in your credit report, you can contact the credit bureau and lender to correct it.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
