Trade Line: Definition, How It Works, and Included Records (2024)

What Is a Trade Line?

A trade line is a record of activity for any type of credit extended to a borrower and reported to a credit reporting agency. A trade line is established on a borrower’s credit report when a borrower is approved for credit. The trade line records all of the activity associated with an account.

Comprehensively, trade lines are used by credit reporting agencies to calculate a borrower’s credit score. Different credit reporting agencies give differing weights to the activities of trade lines when establishing a credit score for borrowers.

Key Takeaways

  • A trade line is created on a borrower’s credit report to keep track of all the activity on the account.
  • A trade line is created for every line of credit or account a debtor has such as a mortgage, car loan, student loan, credit card, or personal loan.
  • Trade lines include information on the creditor, the lender, and the type of credit given.
  • A closed credit account will generally remain on a trade line for seven to 10 years.
  • A trade line includes all relevant information used to determine your credit score. It is important to review your trade line to ensure all information is valid and free from error.

How a Trade Line Works

A trade line is an important record-keeping mechanism that tracks the activity of borrowers on their credit reports. Each credit account has its own trade line. Borrowers will have multiple trade lines on their credit report, each representing the individual borrowing accounts for which they have been approved.

The basic types of accounts that have a trade line are those paid off in fixed installments, and these accounts are often broken into categories. First, revolving trade lines are reported on credit cards or other lines of credit. Second, installment trade lines report the history of car loans, mortgages, student loans, and personal loans. Open accounts, a third type of account on a trade line, are often associated with businesses as opposed to individuals.

Records Included in a Trade Line

Trade lines may contain a variety of different data points related to the creditor, the lender, and the type of credit that is being provided. The trade line often contains the name of the creditor or lender, the account or another identifier for the type of credit being provided, the parties responsible for paying the loan, and the payment status of the account.

The trade line will also contain particular account milestones, such as the date the credit was extended, the credit limit, the payment history, all levels of delinquency if any missed payments have occurred, and the total amount owed as of the last report. If a consumer closes an account, that account will typically remain on his or her credit report as a trade line for seven years, though in some cases the account can go away sooner.

Payment status indicates whether or not payments for the loan are being made on time and how late they are if they are not being made on time. If the payments are being made on time, the payment status will indicate that the payments are being made according to the terms of the credit agreement.

The information included in your trade lines is used to calculate your credit scores. While your credit score is a summarized snapshot of your creditworthiness, lenders may inquire to see a detailed report of your entire trade line.

Special Considerations

Late payments are usually grouped in a range of days according to how late they are. For example, delinquencies may be reported as 30 days late, 60 days late, or 90 days late. The payment status may be set to “charge off” if the creditor deems it unlikely that the debt will be repaid, and the status may also indicate that the credit recipient has entered bankruptcy.

As trade lines are used by credit reporting agencies to develop an individual’s credit score, credit scores vary, with higher scores generally given to individuals with more-favorable trade line reporting. Factors considered when calculating the credit score include the number of trade lines, types of trade lines, lengths of open accounts, and payment history.

In addition to reviewing a borrower’s credit score, a lender who pulls data from a credit-reporting agency may also comprehensively analyze all of the trade line reporting on a credit report when considering a credit application in the underwriting process.

FICO Credit Score

When applying for credit, your lender will often request your credit score as part of the approval process. Your FICO score is directly determined from the information listed on each trade line. Below is how your FICO score is calculated and how each section relates to trade lines.

  • Payment History (35%): Trade lines include debt or lines of credit that have been closed for up to 10 years.
  • Amounts Owed (30%): Trade lines are created for every line of credit. Each line of credit, revolving line, or installment agreement has its own trade line.
  • Length of Credit History (15%): Trade lines include every payment you've ever made against every account or line. This also includes every installment payment you've missed.
  • New Credit (10%): Trade lines are generally created within a month of the first payment being made on the associated line or account.
  • Credit Mix (10%): Trade lines are created for a variety of types of accounts including mortgages, car loans, credit cards, student loans, and personal loans.

What Is a Trade Line?

A trade line is a summary on every revolving or installment credit you have. This detailed report outlines your creditworthiness by communicating to creditors and lenders your payment history, your credit history, and your delinquencies.

What Is an Example of a Trade Line?

A trade line is created for every credit line you own. An example of a trade line is your car payment history. When you begin repaying a car loan, a trade line is created that summarizes your contact information, your current payment status, the date the line of credit was opened, and the date the line was closed.

The trade line will also report current information such as the date of your last payment, the current balance remaining, and your monthly payment amount.

Can Trade Lines Hurt Your Credit?

Yes, trade lines communicate to lenders your prior creditworthiness and details how much debt you have, what your current minimum monthly payments are, and what your historical payment delinquencies are.

How Do You Get a Trade Line?

A trade line is automatically created for you when a new line of credit is started. For example, when you sign up for a new credit card, a new trade line is created specific to that individual line of credit. As you incur purchases on the card and pay off debt balances, a record of history is created.

How Long Do Trade Lines Last?

Trade lines may show up on your credit report as soon as 15 days after the time of purchase. Alternatively, a trade line may be delayed on showing on your report up to 45 days depending on the timing of the purchase.

Each credit reporting agency may have varying terms on how long a trade line is maintained. In general, a trade line is often maintained on your account 10 years after the trade line has been closed. Trade lines with a negative history are generally closed between seven to 10 years.

Trade lines for fraudulent or erroneous reports can be disputed. After credit bureau agencies receive valid proof, these trade lines are often removed within 30 days of review.

Trade Line: Definition, How It Works, and Included Records (2024)


What is a tradeline and how do they work? ›

A credit tradeline is the industry term for an account included on your credit report. Each individual account, whether it be a credit card or loan, appears as a tradeline and is reported to the major credit bureaus, which are Experian™, Equifax® and TransUnion®.

Do you have to pay tradelines every month? ›

Types of Trade Lines

These include: Revolving: A line of credit or credit card. Installment: Mortgages and car loans that you pay back over time without being able to automatically borrow again. Open trade lines: Types of credit accounts that must be paid back in full every month, such as your rent.

How long does a tradeline stay on your credit report? ›

The Takeaway

Tradelines stay on your credit report for at least seven years. Therefore, it's important to review your report regularly to ensure that each tradeline is accurate.

How do business tradelines work? ›

A business tradeline is a credit account between a business and vendor. Typically, a supplier or vendor will offer the business payment terms such as net-30, which means the business can pay for purchases in 30 days, rather than upfront.

What is a tradeline for dummies? ›

What Is a Trade Line? A trade line is a record of activity for any type of credit extended to a borrower and reported to a credit reporting agency. A trade line is established on a borrower's credit report when a borrower is approved for credit. The trade line records all of the activity associated with an account.

What is a trade line? ›

Tradelines represent things such as credit accounts, loans and collections on credit reports. There are nuances in how credit bureaus display tradelines. Tradelines and credit reports directly affect credit scores. Tradelines can also be used to judge things such as credit applications.

How much will a tradeline boost my credit? ›

Positive Impact: Tradelines with a positive payment history on accounts in good standing can be beneficial. They can Increase the number of credit lines you have, which factors into your credit mix (10% of your score). Lengthen your credit history, especially if the tradelines are seasoned accounts (15% of your score).

How do you make money from tradelines? ›

People make money by selling their authorized user tradelines. While you may not reach earning $1,000 per hour, you may earn a side income. There are some risks that come with selling tradelines, such as potentially getting your account shut down if you add to many authorized users.

What are the cons of using tradelines? ›

Risks of credit tradelines

If the tradelines you add have a history of late payments or other negative factors, creditors can use this information from your credit history to weaken your access to credit. So be prepared to pay any tradelines on time and in-full over the course of the tradeline.

What happens if I add a tradeline to my credit? ›

Buying tradelines will do nothing to help you build good credit habits because you won't have access to the account. And, if you buy a tradeline from an individual rather than through a service, which can protect your personal information, you may be at risk of becoming a victim of identity theft.

Can lenders see tradelines? ›

The tradelines in your credit report are used primarily for calculating your credit score. But lenders also look at your tradelines when reviewing your credit application. For instance, if you have a high balance on a credit card, a lender will note your credit limit to determine your credit utilization.

How fast do tradelines work? ›

The length of time a tradeline shows up on your credit report depends on several factors. But, generally, it takes about 15 to 45 days before credit bureaus report it. Meanwhile, how long it stays on your credit report varies depending on the tradeline.

Can I add a tradeline to my LLC? ›

You can get tradelines by opening accounts with companies that report to the business credit bureaus. Credit cards, loans,leases, and lines of credit can add financial tradelines to your credit reports.

How much do people pay for tradelines? ›

The cost of tradelines can range from several hundred dollars to several thousand dollars. Pricing may vary depending on how long the account has been opened and the size of the credit limit, as well as how many you purchase.

Who adds trade tradelines to your credit? ›

Quite simply, credit accounts can often have more than one authorized user. If you ask someone you have a trusting relationship with to add you to their account as an authorized user, the tradeline will be added to your credit report. This means you can benefit from the other person's positive repayment history.

Is it worth getting tradelines for credit? ›

While buying tradelines may provide a quick boost to your credit scores, it also comes with risks and potential downsides. There's no guarantee that paying for tradelines will improve your credit scores, and it will likely be more expensive than doing it yourself.

What does a tradeline do for your credit? ›

A tradeline is an account that appears in your credit report. Examples include credit cards, mortgages, personal loans and auto loans. When a credit bureau is asked for your credit score, the tradelines in your credit report are used to generate that score.

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