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Buying a tradeline is one way to improve your credit score, but it can be costly, and you could be putting yourself at risk of identity theft. What's more, lenders consider the practice to be deceptive.
As a result, buying tradelines isn't advised, and there are better ways to build your credit. Here's what you need to know about the practice and the risks involved.
How Buying Tradelines Works
A tradeline is another name for a credit account that shows up on your credit reports. Each loan and credit card has a separate tradeline that includes various information about the creditor and the account.
Buying a tradeline involves paying someone to add you to one of their credit accounts, typically as an authorized user on a credit card. Because many credit card companies report account activity to the credit reporting agencies (Experian, TransUnion and Equifax) for both the primary cardholder and authorized users, their positive account history can potentially help improve your credit.
Tradeline companies act as intermediaries, connecting buyers and sellers for an additional fee. Depending on the account's credit limit and age, the cost can range from a few hundred dollars to upwards of $1,000.
You'll also need to provide a copy of your driver's license and your Social Security number. Once you've completed the process, you'll be added to the seller's tradeline for a couple of months, after which you'll be removed. The account will remain on your credit report as "closed" and can remain on your report for up to seven years.
Is It Illegal to Buy Tradelines?
There is no law against buying tradelines to improve your credit. However, buying tradelines may be viewed as deceptive by lenders and credit reporting agencies and could even put you in danger of committing bank fraud.
Credit scores are designed to help lenders determine a borrower's creditworthiness, and most use your credit scores and credit reports to determine whether to approve a credit application and what terms you qualify for.
If you pay money to improve your credit scores without doing any of the work or even getting a card to use, you could be falsely representing your creditworthiness to potential lenders.
What's the Difference Between Buying Tradelines and Becoming an Authorized User?
When you buy a tradeline, you're technically becoming an authorized user on another person's credit card account. However, unlike the traditional authorized user process, you don't know the person who's adding you to their account, and you're paying for the service.
With a traditional authorized-user scenario—which is acceptable and even encouraged by credit card companies and credit bureaus—a family member or friend adds you to their credit card account.
In this situation, you don't have to pay the primary account holder, and you'll typically get a card linked to the account that you can use (with the primary cardholder's approval) to develop good credit habits.
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.
Alternative Ways to Improve Your Credit Score Fast
If your credit needs some work, buying a tradeline may seem like a quick fix. However, it won't have as much of a positive impact as some of the alternatives. Here are some other ways to improve your credit score fast.
Pay Down Credit Card Debt
Your credit utilization rate, calculated by dividing a credit card's balance by its credit limit, is a major factor in your credit score. If you have a high utilization rate, paying down your balance can help improve your credit score as soon as the account gets reported again to the credit reporting agencies.
There's no hard-and-fast rule for what your utilization rate should be—the lower, the better—but as you start paying down your balance, you may start seeing your credit score increase.
Dispute Credit Report Inaccuracies
If there are erroneous or fraudulent tradelines on your credit reports, they could bring down your credit score. Get a free copy of your report from each of the credit reporting agencies through AnnualCreditReport.com and review them for potential problem accounts.
You can also monitor your FICO® Score☉ and Experian credit report more regularly through Experian's free credit monitoring service.
If you find errors on your report, you have the right to dispute them directly with the credit reporting agency, as well as with the creditor. If the credit bureaus confirm your dispute and either remove or correct the information, your credit score will respond accordingly.
Sign Up for Experian Boost®ø
Historically, utilities, rent and streaming subscriptions haven't been included in your credit scores. But with Experian Boost, you can now get credit for making these regular monthly payments.
Once you register, you can link your financial accounts and allow Experian to identify your positive payment history. Then, you'll verify the data and confirm you want it included in your Experian credit file. Once you do so, your FICO® Score will be updated immediately, possibly resulting in a credit score boost.
Focus on Developing Good Credit Habits
There's no guarantee you'll get the benefits you're paying for when buying a tradeline, and there are ethical and potential legal issues to consider with the practice.
If your goal is to improve your credit score and keep it in good shape, the best way to do that is to develop and practice good credit habits. Make your payments on time every month, keep your credit card balances relatively low, pay them in full each month and avoid unnecessary debt.
As you establish a positive credit history over time, check your credit score regularly to track your progress. Focusing on good credit habits rather than quick fixes will give you a much better chance of maintaining it where you want it to be in the long run.