How Tradelines Improve Your Credit Score

 

How Tradelines Improve Your Credit Score

Most of us aren’t familiar with what tradelines are or how they work. Essentially, tradelines are often credit cards designed to improve your credit score, although any credit line that appears on your credit report can be a tradeline. On the other end of the spectrum is credit repair, which is the process of removing negative items from your credit report. Credit repair often means “challenging” negative items on a credit report or slowly removing excessive credit limits that no longer serve you.


Generally, credit repair can take quite a lot of time, but adding tradelines to improve your credit can have an almost instant positive effective. Most credit scores and reports are updated on a monthly basis, and the tradeline will appear and make an impact within 30 days.

If your goal is to improve your credit score overall, utilize both tradelines and credit repair. However, keep in mind that adding any line of credit won’t necessarily improve your score or be considered a tradeline. Most of the time, tradelines work by collaborating with someone who has a high credit score. (Alternatively, if you’re the one with a high credit score and are looking to help out a loved one such as a child, you can add them onto one of your lines of credit to boost their score.)

Tradelines might also be considered “piggybacking” onto someone’s account who has a flawless line of existing credit. Sometimes a tradeline relationship is established because the two people (the owner of the credit line and the newly authorized user) have a personal relationship.

The most common is a parent and child, and the parent is helping their child finance a car or adds them onto a credit card to help get their credit history established. Other times, it’s a professional arrangement where the newly authorized user pays someone to be added to their account. Both options come with potential risks, and it’s paramount to get an agreement in writing.

Tradelines for Those with Personal Relationships

It doesn’t matter what your relationship is. Maybe you’re going to add a spouse, child, parent or lifelong friend to your line of credit to help them out and you trust them completely, but there still needs to be boundaries.

Having a written contract that outlines each person’s responsibilities, contingencies and other details can help keep relationships intact and protect everyone in case of a problem. If the authorized user isn’t supposed to actually make any purchases on the credit card they’re being added to, what happens if they do? If the authorized user is responsible for making monthly payments, what happens if they miss a payment?

It can feel awkward to bring up written agreements with loved ones, in which case a professional mediator can be useful. There are a variety of fill-in-the-blank forms available online, and having your agreement signed by a notary public can help further validate your agreement. Plus, if you’re adding a child as a user on an account, such a process can make the responsibility seem more genuine.

Bear in mind that money can easily come between relationships. Whether you’re helping someone out by adding them to your account or you’re the newly authorized user, don’t risk anything financially that you’re not wholly willing to lose. The other person might have the best of intentions, but as the saying goes: “People are funny about money.” Does this mean it’s better to pay a stranger with perfect credit to piggyback on their credit and account? Perhaps, but that relationship can come with challenges, too.

Tradelines for Those with Professional Relationships

Always research an established tradelines company who specializing in listing the highest quality tradelines available. Often, these companies act as middlemen so you don’t work directly with the person adding you to their line of credit. This helps keep everything clean and professional.

Check their status with the Better Business Bureau, read third-party reviews, and always trust your gut. These companies might charge a variety of fees, which can make it tempting to go bargain hunting for tradelines. Comparison shopping is financially savvy, but don’t let the fees alone drive your decision.

You might find a posting on a site like Craigslist offering tradelines at a bargain. Maybe a friend of a friend is offering to add users to their account at an unbelievable price. This is a huge gamble that might lead to several years of untangling a mess. Adding someone to your credit line is a big deal.

It makes sense for someone to want to help you out if you already have a personal relationship, but what’s in it for a stranger if they’re not making a sizable profit from the arrangement? In some cases, offering tradelines can be an underhanded way of starting the process of identity theft. Choosing a professional tradelines company can be a safe and effective way of quickly improving your credit, especially if you don’t want the mess of asking a loved one for help. However, expect to pay a price for these fast improvements.

Improving Your Credit One Line at a Time

Tradelines are just one way to potentially improve your credit. They’re especially effective for those who have limited or no credit history, although they’re also beneficial to those with existing credit. A holistic approach to improving or establishing your credit history is best, so think of tradelines as just one of many strategies.

If you have negative marks on your credit report, credit repair is also essential. Each credit reporting agency has different requirements for challenging negative remarks, but oftentimes the process is fast, easy and can be done online.

Unfortunately, some means of establishing credit can be frustrating. The longer a credit line is opHow Tradelines Improve Your Credit Scoreen (such as a credit card), the “better” it is for your credit report. It’s why some people hang on to that first credit card they got at 18 years old even though it has a high APR and no rewards.

Always call and talk to your creditors to ask for lower APRs and about any rewards they might be able to tack on. Oftentimes, APRs are negotiable, but it’s essential to talk to a live person. That makes it much more difficult for them to say no, and customer service representatives usually have some power to negotiate percentage rates.

There’s little you can do about the length of your credit history besides keeping long-term accounts healthy and open. There’s also not much you can do about “hard inquiries” to your credit report when you’re making a large purchase like a home or car. Only time can undo this damage.

However, in the process of making large purchases, it’s certainly within your power to request limited hard inquiries. For example, if you’re building a home instead of buying an existing one, there might be numerous times when a creditor(s) wants or needs to check your credit report. Work with them to limit these checks, and have the most recent credit report readily available.

When prioritizing a credit health history, here are a few tactics to keep in mind:

• Get monthly credit reports, and sign up for alerts. There are websites that let you check your credit report for free, and some credit cards offer it as an option, too. You can also sign up for alerts if someone queries your credit report or if there are any changes. Mistakes can happen with credit reports, and you need to catch them as quickly as possible.

• Think carefully before adding a new line of credit. This goes for tradelines as well as “regular” new lines of credit, from a new credit card to financing a large purchase. Gauge the potential benefit or damage from a new line, and compare it to possible near-future situations. Are you planning to start shopping for a home in the next year? If so, you might want to consider adding a tradeline to boost your credit or put off that personal loan until the home shopping process is complete.

• Make payments on time. This one should be obvious, but it’s easy to slip up. Either opt for auto payments or have a regular reminder to make payments on time. Many lines of credit have some wiggle room for a grace period, but you don’t want to bank on them.

• Choose quality credit cards that will benefit your unique needs. If you’re in the market for a new credit card, spend some time comparison shopping. Get a credit card with a low APR and with rewards you’ll actually enjoy. For some, it’s purchase erasers, while others are all about the miles.

With so many avenues for improving your credit, why not take advantage of all of them? Tradelines are a lesser-known strategy, but one that can be fast, useful and very beneficial under the right circumstances.

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