Many individuals who research authorized user tradelines want to buy the biggest tradeline possible. This comes from the belief that large tradelines will result in the maximum increase of their credit score.

Analysis 6 looked at the average change in credit score based on the tradeline’s limit to analyze this mentality’s truth.

There were 8 categories of the size of the tradelines:

• $0 to $6,000;
• $6,001-$9,999;
• $10,000-$14,999;
• $15,000-$19,999;
• $20,000-$24,999;
• $25,000-$29,999;
• $30,000-$34,999;
• $35,000+.

Because many factors influence the change in credit score, it can be tricky to isolate one feature. Only clients who ordered one tradeline were included in this portion of the study to account for this. This ensured that there was no need to account for the limits of multiple tradelines. 512 of the participants were included in this analysis.

Analysis 6 findings.

It was found that the addition of tradelines with limits up to $35000+ had the highest average credit score. The credit score boost for this category was 91 points. This limit group was followed closely by tradelines with limits from $10,000-$14,999 with an average increase of 85-point increase. The next highest was $15,000-$19,000 with an increase of 79 points. All other categories had roughly the same impact, resulting in a median increase of 60 points.

The addition of tradelines with the largest limit resulted in the most significant average change in credit score. This implies that the bigger tradelines can be better. However, the tradelines with limits of $20,000-$34,999 saw the lowest average change, which contradicts this sentiment.

These results are significant because they contradict the hypothesized outcome that a larger limit tradeline always has a more substantial contribution to the credit score than a smaller limit tradeline. This indicates that while larger limit tradelines added to someone’s credit report can have material impacts on the credit score, this is not always the case. Since many factors contribute to a credit score, it is important to fully consider all aspects of a tradeline when adding a tradeline to your reports, not just the tradeline limit.

The change to the credit score is not solely due to the limit of the line that is added. While it is an essential factor, it cannot be thoroughly analyzed independent of the tradeline’s age that is added.

Most individuals do not need to get a specific credit score when moving forward with their financial goals. Instead, they need to fit into a general score range.

FICO scores have five range categories. Credit scores lower than 580 are considered a “poor” score.  581-669 is a “fair” score. 670-739 is a “good” score. 740-799 is a “very good” score. 799+ is considered an “exceptional” score.

The distribution both before and after the tradelines were added to their reports were recorded and analyzed.

Many lenders use the credit scores from all three bureaus to determine an applicant’s score range. This was emulated by comparing the average of the before and after scores for all bureaus together.

Before.

It was found that most participants started the study in the lower categories:

• 34.56% in the poor score category,
• 48.38% in the fair score category,
• 13.68% in the good score category,
• 3.39% were in the “very good” category,
• and 0.00% were in the excellent category.

After.

After the addition of the tradeline, most clients were in the middle to upper credit score ranges:

• 9.68% of clients remained in the poor credit score category,
• 51.90% were in the fair credit score category,
• 27.14% were in the “good” category,
• 10.63% were in the “very good” category,
• and 0.63% were in the “excellent” category.

This analysis shows that roughly 20% of the individuals with poor credit scores improved their credit score by adding tradelines. Additionally, the proportion of clients who had great or excellent credit scores increased from 3.39% to 11.26%.

These factors indicate that the average client saw a positive shift in their credit rating due to the tradelines.

Fitting into a higher credit score category can have many benefits on achieving lending. Higher rates of approval, larger limits granted, and lower interest rates are just a few reasons people try to improve their credit score before applying for funding.

Findings.

This finding implies that the number of participants who qualified for higher credit score brackets increased after the addition of tradelines.

The number of tradelines added to an individual’s credit reports can significantly impact the credit score change. More tradelines often result in a larger credit file, lower utilization, and an increase in the average age of accounts.

Analysis 4 analyzed the score change individuals who purchased one, two, and three tradelines to isolate this factor.

The addition of more than three tradelines is complex. Further, it is rarely beneficial to an individual to add more than three lines to their credit file. Because of this, participants were never added to more than three authorized user tradelines at one time.

Analysis findings.

• One tradeline had an average increase in 86 points to Experian, 66 points to Equifax, and 73 points to TransUnion.
• Two tradelines had an average increase of 170 points to Experian, 110 points to Equifax, and 126 points to TransUnion.
• Three tradelines had an increase of 170 points for Experian, 160 points for Equifax, and 186 points for TransUnion. 

As you can see from the first graph, the addition of multiple tradelines can have beneficial effects. The average score increase for the addition of one tradeline was 75 points. Two tradelines resulted in an increase of 135 points, and three tradelines resulted in an increase of 172 points.

However, it is not a linear progression. There are diminishing returns on the credit score due to the addition of multiple tradelines. Many people believe that more tradelines will always result in a higher score. However, it is essential to note that the quality, not the number of tradelines, is critical.

When adding tradelines for credit improvement, context matters.

The impact of the tradeline will depend substantially on the information that is already on the credit reports. 

The second analysis we ran shows that individuals assigned one tradeline has the highest average starting credit score. Those who were given two tradelines have the second-highest starting score, followed by those who were assigned three tradelines. The higher the starting credit score, the more difficult it is to improve the credit score drastically.

The participants who ordered three tradelines started with a lower average credit score. Thus, they would have more room for improvement to hit the same score as those given one tradeline. This is one reason that the clients who ordered three tradelines saw a larger increase than those who ordered two.

Interestingly, the ending credit score for all individuals was within 10 points for Equifax, within 32 points for Experian, and within 23 points for TransUnion, despite how many tradelines were ordered. This implies a theoretical cap on the benefit that the tradelines can provide to a credit score.

Because of this, an individual’s specific situation should be considered when determining how many tradelines to add to their credit report.

We studied the impact of tradelines on credit score change for participants who had a preexisting credit file. 809 participants were included who had a credit score before the addition of authorized user tradelines.

It was found that the average credit score change was 30 points for Experian, 36 points for Equifax, and 40 points for Transunion. The average change in credit score across all three bureaus increased 35 points to the credit score.

This average increase is minor compared to the average score increases for those with no credit file.

93.6%  of the participants in the study started with some credit score. Thus, this is a more appropriate figure to apply to most situations.

Average increases explained.

There are many explanations why these clients saw significantly smaller increases in their scores.

• First and foremost, the lowest FICO score is 350. If clients received any increase in score, they would see at least 350 points. This is an unrealistic expectation for anyone whose credit score is above 500, since the perfect FICO score is 850.
• Additionally, the tradelines added to their reports were no longer the only factor determining the credit score. Instead, they were among many. Since each tradeline contributes to the credit score, having multiple accounts would lessen the impact of new tradelines.
• Finally, it was impossible to guarantee that each account on the participant’s reports was in good standing. Only the authorized user tradelines added were guaranteed to be in good standing. Recent negative factors, like late payments or collections, can negate the benefit of adding a tradeline to a report.
• The clients who had credit files prior to the tradeline were more likely to have negative factors on their reports. This could be why the average improvement in the credit score is limited here.

Thin or non-existent credit files typically cannot generate a credit score, so they were assigned zero value. Since the lowest FICO credit score possible is 300, any addition to the credit report would cause the score to rise hundreds of points.

Fifty-one participants had no credit score before adding the tradelines, which accounted for 6.4% of the study participants.

Since this situation occurs frequently, we separated participants who had no starting credit from those with credit scores. The data was analyzed once the participants were split into these categories.

The addition of an authorized user tradeline to the credit report for these clients resulted in an average increase in the credit scores. The average increase in score for Experian was 720-points, for Equifax was 752-points, and for TransUnion was 754-points.

Beneficial tradelines for credit.

These results suggest that it can be highly beneficial for individuals with no credit score to be added as an authorized user tradeline. Individuals who had no starting credit score were intentionally separated from those who did have a credit score. This was because authorized user tradelines tend to impact those who have a small credit file significantly.

Given that there is little information on the report for the credit score formula to include, adding a tradeline in good standing can dramatically improve multiple factors that influence the credit score.

While there are fewer of these clients, there is a higher average score which inflated the results of Analysis 1. These findings are also in accordance with the results of the study by the Federal Reserve (1).