types of tradelines

07 Jul 2021

Types of Tradelines: What do you need?

There are really two types of tradelines:

  1. Types of tradelines number 1: Any account in your credit report; the term “tradelines” in that context is just industry jargon for “account.”
  2. Types of tradelines number 2: The addition of authorized user accounts to credit reports for the purpose of increasing credit scores (sometimes referred to as “seasoned” tradelines); this is viewed as a credit hack or credit repair technique

There are subtypes within those two categories. Types 1 and 2 are broken down, below.

Types of tradelines Number 1:

The term is very literal. “Tradeline” is similar to the term “trade account” which is basically a line of credit issued to a company that they use as a credit card. Perhaps this is the origin of the term tradeline? I don’t know.

But, in a consumer credit report, there are accounts listed. These accounts are called tradelines.

Here’s an example:

Types of Tradelins (example 1)

You can see the date opened, date of last activity, payment history, balance, limit, status, type, source, etc.

With respect to a specific account in a credit report, this information is collectively referred to as a tradeline.

Here are the different types in that context:

  • Installment accounts: These are usually “fixed” payment arrangements like car loans. This includes other types of financing, such as for appliances (with one purchase and one price that is paid back).
  • Mortgage accounts. A mortgage account is technically an installment account. But, it is treated differently in credit reports and scoring models. Therefore, we distinguish them.
  • Revolving accounts. Revolving accounts have open-ended charging abilities, like a credit card or a home equity line of credit. You have a total spending ability that you can charge up or pay down. Unlike installment accounts or mortgages, you can purchase more than one thing over time. And, your spending limit can increase or decrease over time.
  • Open accounts. Consumers rarely have open accounts. Open accounts are very transactional; you “buy” something (on credit with the open account), it is delivered, and then you pay back the amount.

All types of tradelines look the same on a credit report.

More specifically, while some reports may change format or layout, the information in a tradeline is usually the same.

If you read this far, you’re probably like:

“Yeah yeah yeah, that’s not what I mean. What are the types of tradelines that improve credit scores?”

Type of tradelines Number 2:

The types of tradelines designed for credit improvement are called seasoned tradelines or authorized user tradelines and the process is often called piggybacking credit.

However, this credit improvement technique has been reduced to just the term tradelines by itself, hijacking the original meaning.

In this credit improvement vein, there are many versions of tradelines that can be added to your credit report for the purpose of increasing credit scores.

Here are the different types in that context:

  • Piggybacking credit. This is where you are added as an authorized user to an existing account in good standing, with a high limit and low balance. A 24-page study shows piggybacking effectiveness.
  • Secured credit cards. This is where, a person that cannot otherwise be approved for a credit card, places money upfront in exchange for a credit card from a bank (which is “secured” by the funds).
  • Rental tradelines. This is where a company converts your rental history into a “tradeline” that reports to the credit bureaus.
  • Experian Boost. Experian started a program to allow people to convert certain bills into credit.

Bonus: buyer beware!

There are many types of tradelines that are totally illegitimate. This isn’t subjective. We’re suggesting that people have gone to jail for misuse of tradelines in certain ways.

Here are some tradelines you’d probably want to stay away from:

  • Seasoned primary tradelines. These simply do not exist (without fraud). Piggybacking authorized users works because of laws (ECOA). Having a seasoned primary tradeline would exist only if a law was broken (FCRA).
  • Business tradelines. Business tradelines exist, if you establish a business, establish banking relationships, establish a Dun and Bradstreet credit report and establish a line of credit under the business’s name and EIN which reports to the Dun and Bradstreet credit report. They do NOT exist as an account you can buy, like tradelines for sale on the consumer side.
  • Any tradeline on a CPN. So-called credit profile numbers are fraudulent secondary social security numbers. Typically, these are referred to as “synthetic identity fraud.” As such, any tradeline on it is associated with the fraud.

Conclusion.

Tradelines are accounts in your credit report, with many different types. Piggybacking credit is the addition of authorized user tradelines to improve credit scores. Fictitious and fraudulent tradelines are easy to spot and you should stay away from them.

 

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