By Allan Halcrow | American Express Credit Intel Freelance Contributor
5 Min Read | March 5, 2021 in Credit Score
Your credit report has a separate “tradeline” for each of your credit accounts.
Tradelines include detailed information about the nature of the account and your payment history.
Information in your tradelines is used to determine your credit score, so it’s important that it’s accurate.
Tradelines stay on your credit report for at least seven years and possibly much longer.
What is a tradeline? It may sound vaguely like something from the world of stocks and bonds, but it’s actually a vital part of credit reporting. In simplest terms, a tradeline is an individual account listing on your credit report. But if you’re looking to build and maintain a positive credit profile, it helps to know more than just what a credit tradeline is. Experts say it’s also helpful to know:
By understanding all those elements, you might be better able to make financial decisions that can keep your tradelines healthy – and in the process establish good credit history and boost your credit score.
Each account you have is a single credit tradeline. That’s true whether your payment is current or past due, the account is open or closed, or the account is in your name only or held jointly with someone else. But all tradelines are not identical. They fall into three categories:
The weight and elements of credit tradelines vary from one category to another. For example, falling behind on mortgage or auto loan payments will likely cause greater damage to your credit score than missing a credit card payment. And a credit card tradeline includes your credit limit and utilization, while an auto loan tradeline does not.
Tradelines, like the credit reports they are part of, are intended to help creditors minimize the risk of lending decisions. Therefore, each tradeline includes a wealth of potentially helpful information. Typically, this includes:
Although most tradelines include all the relevant information on this list, don’t be surprised if you find variations. It’s up to creditors to decide what to report to the credit agencies – or whether to report at all – so some may omit one or another of these categories.
Experts suggest you review your credit reports from all three major credit reporting agencies at least annually. You’re entitled to a free report once a year (weekly through April 2021), and you can get them at www.annualcreditreport.com. Experts suggest you carefully check all the details in every tradeline for any errors in your balances, payment history, or credit limit.
The data in your tradelines is used to calculate your credit score. In fact, you must have at least one tradeline that’s been active within the preceding six months to have a credit score. Each element of each tradeline contributes to your score, though the elements are weighted differently. Your payment history, for example, counts for more than how much of your available credit you’ve used. To learn more, read “What Is a Credit Score and How is it Defined?”
Creditors are free to use any of the details in your tradelines to better understand your financial situation. A series of recent late payments may be a sign that someone is struggling to keep up with bills, so creditors are less likely to approve credit applications. But late payments that were several years ago and haven’t been repeated may be seen as evidence that someone had a temporary setback and is now back on their feet. And a creditor who isn’t too concerned that you’ve maxed out a credit card with a $300 limit may feel very differently if you’ve maxed out a card with a $10,000 limit. That’s why you don’t want errors that work against your credit score to inhabit any tradeline.
Unlike fresh produce, tradelines have a long shelf life. Every tradeline will be included in your report for at least seven years, and possibly longer. Fortunately, positive tradelines stay longer than negative tradelines.
As long as any account is open and active, the tradeline will stay on your credit report. A mortgage, for example, might be a tradeline on your report for as long as 30 years. A credit card may show as a tradeline for even longer if you keep it open in good standing. When you close an account in good standing, each reporting agency will decide how long to maintain the tradeline, though it’s typically 10 years. In contrast, tradelines for closed accounts with a negative history are generally removed from your report after seven years. Exceptions are accounts that were resolved through certain forms of bankruptcy; those tradelines may stay on your report for 10 years. Of course, that assumes the negative mark is legitimate. You can dispute information on your credit report, so negative tradelines that are fraudulent or in error can be removed or corrected within 30 days after the credit bureau receives proof.
A credit tradeline is simply an appearance on your credit report of an account you’ve established with a lender. Each tradeline includes detailed information about that account, including payment history, both positive and negative. Those details are used to calculate your credit score and to help lenders decide how risky it would be to lend you money. Tradelines stay on your credit report for at least seven years. Therefore, it’s important to review your report regularly to ensure that each tradeline is accurate.