If you are looking for a solid way to boost your credit rating and get a better deal on your next credit card, mortgage or business loan, take a look at tradelines. Adding tradelines for credit is a process of adding accounts to your credit report in order to enhance your credit rating. Sounds simple, but not all tradelines are made equal.

Try adding a seasoned tradeline, or a line of credit with a low debt-to-credit ratio and a solid history of on-time payments. Once the tradeline hits your credit file, you’ll see an immediate adjustment of your credit score, be it FICO® or Vantage. Most of the lenders use FICO® score which is made up of 40% revolving credit accounts where the credit limit is set by the lender. So adding seasoned timelines can positively affect at least 40% of your credit score.

Are seasoned tradelines right for you?

Tradelines don’t work for everyone. If you have a massive amount of debt or a history of delinquencies, then you may want to consider credit repair before applying for tradelines. Credit repair is the process of fixing poor credit by removing inaccurate information or questionable negative listings from your account. But if your account is in good standing and you are just looking to enhance your credit, than tradelines are right for you.

That said, let’s explore the five main reasons for adding positive tradelines to your credit report.

Reason #1: Tradelines Help Forecast Your Future Ability to Pay

By providing information about how you’ve handled credit in the past, tradelines can help creditors determine how you will pay in the future. The Paydex score produced by D&B, for example, requires three tradelines to calculate a score. This model analyzes payment performance (e.g., if a business pays its bills on time) and assigns a numerical score from 1 to 100. So with every point you get, you will increase your chances of obtaining a perfect payment history.

Reason #2: Tradelines Add Positive Payment History

There are multiple ways of adding positive payment history to your account. Adding your rent, for example, is a powerful way to see an instant increase in your credit score. Since in most cases rent payments are made on time, you can see up to 35-point increase in your credit score and also add up to 2 years of your rental history to provide evidence of a good standing. As long as you pay your rent on time and don’t get to the point that it’s 30 days late, this tradeline will benefit you like no other.

Reason #3: They Help Establish Good Credit Quickly

Since tradelines are accounts that report monthly, it helps to add a tradeline early in the reporting cycle, so you don’t have to wait another 30 days to complete the process. Let’s say the statement of the tradeline is the 1st of the month and you got added on the 15th. After your bank sends all the information to the credit reporting agencies, they update the reports affected 3 to 5 days later. So it will take only 20 days to have you listed as an authorized user and for the tradeline to begin showing up on your account.

Reason #4: Tradelines Help Adjust Your Debt-to-Credit Ratio

Your credit utilization ratio, or debt-to-credit ratio, is one of the factors that go into determining your credit score. A higher ratio means a lower credit score so it’s best to have as low a credit utilization ratio as possible. Seasoned tradelines usually have high limits and low balances, therefore they positively impact your credit score by expanding your credit file and lowering the debt-to-credit ratio previously established on your report.

Reason #5: Tradelines Are Easy to Obtain

Credit cards are the easiest tradelines to get approved for. You can easily apply for a secured credit card by submitting a security deposit to a bank and they will provide you with the credit card. Installment loans like car loans or retail accounts are also a great example of a tradeline. When building up your credit, make sure that your potential creditors report to the credit bureaus because not all companies do.

We hope this article helped you determine if tradelines are the right option for your financial needs. If you would like to learn more about different ways to boost your credit score, contact us today and we’ll be happy to share our knowledge with you.