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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 tradelines to improve your credit score may be perceived as deceiving the lender or even committing bank fraud. Here's what you need to know about the practice and the risks involved.
How Buying Tradelines Works
One piece of advice credit experts often give to people looking to establish credit is to ask a family member to add them as an authorized user on their credit card account. If the account has a positive payment history and the primary cardholder maintains a low balance relative to their credit limit, it may help to build credit.
Becoming an authorized user may seem similar to buying tradelines—but there are two big differences: 1) When you buy a tradeline, you don't know the person who is adding you as an authorized user on their account, and 2) you pay them money for the access.
Buying tradelines is done through a third-party service for a fee, and prices can reach into the thousands of dollars. Once you purchase the tradeline, it will typically remain on your credit report as an open account for a short period, after which you'll be removed from the credit card account.
Is It Illegal to Buy Tradelines?
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.
With the FICO® Score☉ 8 model, which was introduced in 2009, FICO included technology to help reduce the impact of buying tradelines—so the practice may not even give you the boost you're looking for.
How Is Buying Tradelines Different From Becoming a Traditional Authorized User?
As previously mentioned, a traditional authorized-user scenario involves you having a family member—someone you know and trust—add 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, which 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 will not be able to use the card for purchases. In addition, you put yourself in danger of identity theft anytime you give your personal information to strangers. Finally, buying tradelines will expose you to risk you could avoid by finding other ways to improve your credit.
Alternatives for Improving Your Credit Score Fast
Other ways to improve your credit score fast include:
Pay Down Credit Card Debt
Your credit utilization ratio, calculated by dividing your credit card's balance by its credit limit, is a major factor in your credit score, as it shows how much of your available credit you're using. If you have a high utilization rate—over 30%—paying down your balance can help improve your credit score as soon as the account gets reported again to the credit reporting agencies. For the best score, keep your utilization under 6%.
Dispute Credit Report Inaccuracies
If there are erroneous or fraudulent tradelines on your credit reports, they could be bringing down your credit score. Get a free copy of your report from each of the credit reporting agencies—Experian, Equifax and TransUnion—through AnnualCreditReport.com and review them for potential problem accounts. If you want to monitor your credit report more regularly, you can get a free credit report monthly from Experian.
If you find errors on your report, you can dispute it directly with the credit reporting agency, as well as with the creditor, to get it corrected. Once it's removed, your credit score will respond accordingly.
Get Credit for Utility and Telecom Payments
Historically, utility and telecom payments haven't been included in your credit scores. However, with Experian Boost®ø, you can now get credit for making these regular monthly payments. You opt in to allow Experian to identify your utility and telecom payment history, 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 with tradeline buying, and there are ethical and potentially 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 and pay them in full each month, and avoid unnecessary debt. In fact, you're probably better off taking the money you would have spent on buying tradelines to pay down any existing debt.
As you establish a positive credit history over time, you'll start to see changes to your credit score and you'll have a much better chance of maintaining it where you want it to be in the long run.