What Are Tradelines and How Do They Affect You?

What Are Tradelines on Your Credit Report?

Tradelines on your credit report are individual listings for each type of credit account you have, such as credit cards, loans and mortgages. Your credit report shows tradelines for accounts where you're the primary borrower, as well as accounts where you're a cosigner or an authorized user.

Lenders and collection agencies regularly report information about your credit accounts to the credit bureaus, which then add the information to your report. This helps you and others, such as prospective lenders, employers and landlords, to view relevant information about all of your debts in one place.

Types of Tradelines

You may see several types of tradelines show up on your credit report, including:

• Revolving credit: Revolving tradelines include credit cards and lines of credit, which don't have fixed repayment terms and allow you to pay down and reuse your available credit in a revolving manner.
• Installment credit: Installment tradelines are loans with fixed disbursements and repayment terms. They include mortgage loans, auto loans, student loans and personal loans.
• Collection accounts: If a lender sells a revolving or installment credit account to a collection agency, it'll show up as a separate tradeline.

What Information Do Tradelines Include?

Tradelines include important details about each of your credit accounts. Lenders may differ in how they report your information, so you might see some variations across tradelines. But most tradelines generally include the following details:

• Lender's name and address
• Type of account
• Partial account number
• Current status
• Date the account was opened
• Date the account was closed, if applicable
• Date of last activity
• Current balance
• Original loan amount or credit limit
• Monthly payment
• Recent balance (for credit cards only)
• Payment history

What Are Tradelines Used For?

Tradelines are used by credit scoring companies, lenders, landlords and employers for a wide range of credit-related purposes. You can also use tradelines to understand your credit better. Here's a closer look at some of the specific ways the tradelines on your credit report may be used:

• Calculate credit scores: Credit scoring companies like FICO and VantageScore^® use tradeline data to assign you a credit score calculated using one of their scoring models. Credit scores can be helpful because they provide a snapshot of your overall credit health.
• Evaluate creditworthiness: If you apply for a loan, credit card, apartment lease or even some jobs, the lender, landlord or employer may review one or more of your credit reports to assess your creditworthiness. But even if your credit scores are decent, you could still have difficulty getting a loan, for example, if a lender finds negative information, like late or missed payments, in one or more of your tradelines.
• Self-evaluation: As you work to build and maintain good credit, you can use tradeline information to pinpoint areas where you can take steps to improve your credit, such as paying down credit card debt or minimizing credit applications.

What Happens When You're Removed From a Tradeline?

When you're removed from a tradeline it can affect your credit, depending on the type of tradeline and other factors.

For instance, if you're an authorized user on a credit card, both you and the primary cardholder have the right to remove you from the account. If this happens the tradeline will no longer appear on your credit report and you also lose the potential to build credit as an authorized user.

This can also happen if you cosigned a loan application for a loved one and they later qualified to have you released from your cosigner obligation.

Additionally, if the tradeline had positive information that was helping your credit scores, the removal could cause your scores to drop. On the flip side, it could improve your credit scores if the credit card account has a high credit utilization rate or a negative payment history.

Reminder: You have the right to request to have a tradeline removed if the account was created fraudulently by filing a dispute with the credit bureaus.

What Happens if You Close or Pay Off a Tradeline?

Closing or paying off a tradeline can cause your scores to take a temporary hit. Or you might see your credit scores improve, depending on the situation. Here's why:

• Paying off a credit card: If you pay off a credit card balance and keep the account open, your credit scores may improve, especially if the balance was high relative to your credit limit.
• Closing a credit card: Canceling a credit card means you no longer have access to its available credit. If you're carrying a balance on other credit cards, closing a card could cause your overall utilization rate to climb. As a result, paying off a credit card and closing the account might cause your credit scores to dip, at least until you pay down your other balances.
• Paying off a loan: Unlike credit cards, installment loans are typically closed once they're paid in full. This can make your credit mix slightly less diversified which could result in a temporary dip in your credit scores. On the other hand, settling a loan will typically hurt your credit scores because it wasn't paid in full as agreed.

Good to know: The damage to your credit from paying off a loan or closing a credit card is generally temporary. Scores will typically rebound if you pay your bills on time, keep your credit card balances relatively low and avoid unnecessary credit.

How Tradelines Affect Your Credit Score

Tradeline information is the basis of your credit scores, so tradelines directly affect your credit health in several ways. Here's how:

• Payment history: Your payment history is the most important factor in your FICO^® Score^Θ, so having a credit report full of tradelines with on-time payments is crucial.
• Amounts owed: Credit scoring models look at your current and original loan balances, as well as the utilization rate on your revolving accounts. Higher balances and utilization rates may lower your score.
• Length of credit history: Scoring models use open and closed dates to calculate the age of each account, as well as the average age of all of your accounts. Longer credit histories and age of accounts have the potential to improve your score.
• New credit: This score factor considers how long it's been since you opened your newest account, which will be listed in the tradeline. New credit also incorporates recent hard inquiries, but those are listed separately from your tradelines.
• Credit mix: Each tradeline lists the type of credit account—such as credit card, student loan or auto loan. In general, having a good mix of different types of credit can help improve your score.

Learn more: What Affects Your Credit Scores?

How Long Do Tradelines Stay on Your Credit Report?

The length of time a tradeline remains on your credit report varies depending on the account's status, such as whether the account is open or closed and if an account was in good standing when it was closed.

• Open tradeline: Indefinitely
• Closed tradeline in good standing: 10 years
• Closed tradeline in poor standing: Seven years

Tip: Keep in mind that negative tradeline information can stay on your credit reports for seven years. However, practicing good credit habits can help you minimize the impact over time.

Review Your Credit Reports and Tradelines Regularly

Maintaining good credit scores is crucial for a strong financial foundation, so it's a good idea to check your credit reports regularly to evaluate your credit health. Pay close attention to your tradelines to identify inaccuracies and determine whether you need to make adjustments to how you manage your debt.

Start by checking your Experian credit report and FICO^® Score for free to get insights and ongoing alerts. You can also get a copy of your Equifax and TransUnion credit reports for free weekly through AnnualCreditReport.com.