How Do Tradelines Work?
This is the question we hear all the time from those who are new to the trendline industry. Perhaps you asked it yourself. We explain In this article, how tradelines work and how they can affect your credit.
Although the term "tradeline" simply means any credit account in our business, it usually refers specifically to authorized user (AO) tradelines or the location of an authorized user on someone's credit card. An AU tradeline is an account that nominates you as an authorized user which means you are not responsible for the charges payable to the account. However, the tradeline may still appear in your credit file.
How do tradelines work?
When someone is added to someone else's account as an authorized user, often the complete history of the account is then reflected in the records of both the primary account holder and AO. This is because the credit records don't report the date the AU was added to the account. Thus, once the AU is added, their credit report may begin to show many years of history related to the account.
A common example of this is when a parent nominates their child as an authorized user of their credit cards as a way to help them get credit early. In fact, this practice of being an authorized user is often referred to as "credit piggybacking", often promoted by banks and financial education sites.
What Are Tradelines Used For?
Strategies are often used to help children build credit early in life.
As we mentioned, the tradelines may appear on your credit report. Each credit line has its own credit history in your credit report that is included in your file. This means it is important to choose the appropriate tradelines considering what you already have in your credit profile.
How Do Tradelines Affect Your Credit?
As discussed in our article on credit creation, tradelines are generally the basis of all credit, since your report is basically a file containing information about your tradelines and how you manage them.
The biggest effects of your credit are your payment history, credit usage, and credit age, so these are the most important things to consider when thinking about how each of your accounts will play a role in your overall credit picture.
Can You Buy Tradelines?
The trendline industry took on the concept of "piggybacking credit", as it is often called, and created a marketplace where trendlines could be bought and sold. Basically, people who want to acquire a tradeline can pay a fee to become an authorized user in an existing credit account.
Tradeline companies act as intermediaries to facilitate transactions, protecting the privacy of both cardholders and authorized users.
Why Do Tradelines Work?
Tradelines have been around since the advent of the advanced credit system. Virtually as long as credit cards existed, people wanted to be able to share access to their accounts with others, such as spouses, children, or employees.
However, the role of authorized users was not always considered equally by the credit bureau. Until the Equal Opportunity Credit Act of 1974, account holders often reported accounts shared by married couples only in the husband's name. This prevents women from building a credit history in their own name.
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