What is a Tradeline on a Credit Report?

Did you know an interesting fact about your payment history for credit scores? 35% of your credit score is influenced by your payment history. You can unlock better credit opportunities for financial health if each tradeline on credit report opportunities caters to this crucial percentage. When credit scores are the component that impacts so many things from loan approvals to interest rates, knowing about the fundamentals of tradelines on credit reports could be your passport to mastering credit.

What are the tradelines on credit reports and what is their effect on your finances?

A tradeline on a credit report is the account registered on it and the term tradeline is used by credit reporting agencies. Tradelines essentially include several bits of information like credit cards, loans, and other types of credit accounts you have and it is an indication of how you manage your debt. Knowing how tradelines on credit reports work can help you read your credit report and understand what lenders deliberate when your credits are checked by them.

What does a tradeline on a credit report typically encompass?

A tradeline on a credit report indicates the comprehensive nature of the information it contains.

• Creditor’s Name:
• Account Number:
• Balance
• Payment History
• Credit Limit
• Account Status
• Date Opened:
• Account type

How does a tradeline on a credit report function?

You know now that a trade line report on credit is a crucial method to keep records that track the actions of borrowers on their credit reports. Each credit account has its tradeline. A borrower can have several trade lines on their credit report, each representing the individual borrowing accounts that are approved. The basic types of accounts have a tradeline that is paid off in fixed instalments, and these accounts are usually divided into categories:

1. Revolving trade lines - these are reported on credit cards or other lines of credit.
2. Instalment trade lines- these report the history of car loans, mortgages, student loans, and personal loans.
3. Open accounts – these are often related to businesses and not so much to individuals.

How to understand records in a Trade Line report? 

Trade lines contain various data across data categories related to the creditor, the lender, the account, the type of credit provided, the parties responsible for repaying the loans, and the payment status of the account.

The tradeline report also contains some account milestones as a record like the date for extending credit, the credit limit, the transaction history, if the payments are being made on time and the total amount to be paid from the last report. The credit report shall stay for ten years on the consumer’s credit record even if he/she closes an account.

The payment status in the credit report indicates if the loan payments are being made on time and are according to the terms of the credit contract. The information in your tradeline report helps to calculate the credit scores and is a quick assessment of your credit health for lenders who may enquire for a detailed report of your tradeline.

How to locate Tradelines on your Credit Report?

You can follow these steps to locate the tradelines on your credit report: 

• Request a copy of your credit report from a credit bureau 
• Examine the tradelines on receiving a copy of your credit report. Look for a section labelled “credit accounts” or “tradelines” which will include a list of all accounts that have been reported to the credit bureaus.
• Complete the procedure by checking that all the information in the tradelines section is correct. In case of any errors or inaccuracies on your credit report, file a dispute with the relevant credit bureau. Disputes can be filed online, by phone, or by mail.

Do Tradelines on a Credit Report Affect Your Credit Score?

Tradeline information is based on your credit score, so it has a direct effect on your credit health in many ways. Some of the factors are discussed here:

• Transaction history: Having a credit report full of tradelines with on-time payments is very important in your payment history.
• Principal amounts owed: Your current and original loan balances earn you a better credit score as the credit scoring models and loan utilisation rates on your revolving accounts examine those.
• Credit timeline: The scoring models will have an open and close date and this helps in determining the age of each account and an average is drawn on all accounts.
• New credit account on credit report: The credit score pointer gauges the time since your newest credit account was opened and listed in the tradeline of the credit report. New credit reports need some rigid queries and those are kept separate from your tradelines.
• Credit Types: You can pick up the type of credit account listed in the tradelines of a credit report. Like a credit card, student loan or auto loan, etc. your score will get a positive ranking if you have a good mix of different types of credit cards.

What Happens When You're Removed from a Tradeline on a Credit Report?

For an authorised user of a credit card, the tradeline could potentially create your credit report. But both you as well as the primary cardholder have the right to remove you from the account, and in that case, the tradeline will not appear on your credit report. Another instance is that, if you cosign a loan application for someone, he can later qualify to have you released from your cosigner responsibility. If the tradeline on your credit report shows positive information that was helping your credit scores, a removal would result in a drop in your credit scores. But surprisingly, if your credit card account shows a negative payment history, a removal would give you a window to improve your credit score. In case of any unsolicited account that might have been created fraudulently, you have the right to remove it by filing a dispute with the credit bureaus.

How Closing or Paying Off a Credit Line Affects Your Tradeline Credit Score?

While paying off debt relaxes and improves your financial health besides a good credit score, it's surprising to note that in some cases, your score could be affected reversely. Let us see why

• Advantages of Paying off a credit card: To improve your credit score, consider paying off your credit card balance and keeping the account open.
• Closing a credit card: When you cancel your credit card, you do not have access to the credit available there which means your closure affects the utilisation rate to get higher for your balance credit cards. Here you notice that paying off your credit card and closing the account resulted in a dip in your credit card till the time you pay your other balances.
• Impact on your credit scores after paying off a loan: Loans paid off in instalments are naturally closed once paid in full. This is different from a credit card loan. By paying off your loan, your credit variety gets a bit less diversified and this may result in a downward curve in your credit score.

It is good to know that the effects of your credit card by paying off a loan or credit card closure is a temporary one. By focusing on timely payment of bills, keeping credit card balances low, and not going for unnecessary credit, the scores are bound to grow. 

It is beneficial to get in the habit of reviewing your trade lines, as well as your credit score, whenever you check your credit reports. Be sure all information is accurate and request corrections promptly to ensure a healthy credit profile.

FAQs

Q1. How many tradelines can I have on my credit report?

Ans. There is no limit to any perfect number of tradelines. However, if your goal is to build business credits, you should have at least two to three accounts on your credit report list reporting to a business credit bureau.

Q2. How long do tradelines remain on credit reports?

Ans. Your credit reports will have the tradelines if your accounts are active. Closed accounts remain on your report for up to 10 years. Tradelines with negative history are closed on credit reports for 7 years.

Q3. What is a tradeline credit repair of a credit report?

Ans. Credit repair is the process of removing negative information from your credit report. We know that a tradeline normally adds information to your credit report. So tradeline credit report is simply any account in your credit file.

Q4. What is a tradeline alert?

Ans. It is a statement that shows that there has been a change to one of your tradelines, including any of the tradeline updates listed there. A new tradeline alert means a new tradeline has been forwarded to your credit profile.