One of the most essential parts of building and maintaining credit is establishing tradelines. All of the credit that you have eventually boils down to tradelines.
Today, we’re going to look into what makes tradelines so vital to your credit-building journey.
The Importance of Tradelines
Tradelines are at the foundation of your credit score and your credit reports. On your credit report, you’ll find information like:
- The name of your financial institutions
- The tradeline type
- The date when your account was opened
- The loan amount or credit limit
- The current balance on your account
- Your account’s payment history (which says whether or not you’ve made your payments on time)
The information found in your credit report is calculated to give you a credit score. This means that your credit score ultimately comes down to how you manage your tradelines. Your credit score is determined by a number of credit report factors, including:
- Your tradeline age (the length of your tradeline’s credit history)
- Your on-time payment history
- The mixture of tradelines on your file
- The credit utilization ratios on your balances, loan accounts, and revolving accounts
- Inquiries
Lenders Look at Tradelines
It’s important to note that lenders will look at your tradelines to get a better idea of how you handle your finances.
For example, when you walk into a bank and apply for a credit card, the lender will need to have the assurance that you’ll manage your payments responsibly. They will look at your credit history to determine whether or not you can do that.
If your credit report shows that you have a positive history of making on-time payments, less than a few recent inquiries, a nice balance or mixture of credit, and low credit utilization, then your credit score will reflect it.
The better the credit score you have, the better the chance you have of getting credit card approval. Plus, having a better credit score also allows you to take advantage of numerous benefits, including:
- Lower interest rates
- Higher credit limits
- Better perks for your credit cards
- Lower insurance premiums
- Lower security deposits for rentals or utilities
How Many Tradelines Do I Need?
Tradelines are clearly one of the most valuable indicators of how a person manages credit. If you want to have a good credit score, we recommend having a few types of tradelines in your credit report.
This doesn’t mean you need to go out and get a bunch of credit cards, though you should be able to show that you can manage multiple credit lines at once.
Think about mixing up revolving tradelines, such as HELOC and credit cards, with installment tradelines, such as mortgage and auto loans.
You may also consider authorized user tradelines.
By becoming an authorized user on an account with a good credit history, you can potentially improve your own credit history.
Here at Boost Credit 101, we specialize in helping people like you raise their credit scores with high-quality tradelines. Make sure to reach out to us with any further questions.
