What Are Credit Tradelines?
Credit tradelines are creditors who report your credit and payment history to the credit bureaus. Mortgage lenders consider a credit tradeline as a credit account the borrower has established with a creditor and that creditor has reported it to the credit reporting agencies for at least 12 months. Many mortgage lenders will require three credit tradelines. Some mortgage lenders will require credit tradelines that has been seasoned at least 12 months. Example of credit tradelines include revolving credit accounts, auto loans, student loans, and other creditors who report the debtor’s credit payment history to the three credit reporting agencies for at least 12 months. These credit tradelines are often referred to as traditional credit tradelines. Creditors such as utilities, auto insurance, medical insurance, and landlord payments are often referred to as non-traditional credit tradelines because these creditors do not report them to the credit reporting agencies. The three giant credit reporting agencies are Experian, Equifax, and Transunion.
Why Are Credit Tradelines Important To Lenders?
Credit tradelines are very important and mortgage lenders look at credit tradelines as a reflection of the mortgage loan borrower’s payment habit and future payment risk. The longer the credit tradeline is, the more weight it has for the mortgage lender. Mortgage lenders look at payment history very seriously and will view a borrower who has a long history of timely payment history as a good risk and view past payment history as a reflection of future payment likelihood. Although FHA, Fannie Mae, Freddie Mac, VA, USDA may not require credit tradelines, many mortgage lenders may have mortgage lender overlays on the amount of minimum credit tradelines required and some even require a 24 month seasoning requirement versus a 12 month seasoning requirement.
How Can You Add Tradelines To Your Credit Report?
Tradelines will definitely boost your credit scores, especially an aged credit tradeline. There are consumers with no credit and no active collection accounts who have low credit scores due to not having any credit. For example, if you have a bunch of closed out credit account and did not have any credit for the past few years, the chances are that you will have lower credit scores. If your credit scores are very low, do not apply for any unsecured credit cards because you normally need a credit score of 700 FICO to get approved for an unsecured credit card. The best way of you to start developing credit tradeline on your credit report with a low credit score and no credit is by getting a few secured credit cards. Each secured credit card will boost your credit scores and as your secured credit cards ages, your credit profile will become stronger and stronger and eventually the secured credit card company will grant you a higher credit limit without asking you to put any additional funds. Your secured credit cards can eventually become unsecured credit cards and you will start developing a good credit profile.
Adding Yourself On As Authorized User On Somebody’s Credit Card Account
Another way of developing instant credit tradeline on your credit report is by adding yourself on to a family member’s, relatives, or friend’s credit card as an authorized user. However, there is risk with doing this. You need to make sure that the main credit card holder has an impeccable payment history and equally importantly is that they have a low credit card balance. If you add yourself on as an authorized credit card user with someone with an excellent payment history, however, they have their credit cards maxed out, this will hurt you more than it will help you. There are so many cases where I get mortgage loan borrowers who are authorized users on a credit card but the main borrower of the credit card has maxed out credit cards that I need to request them to remove themselves out as authorized users. One late payment from the main borrower will also plummet the authorized user’s credit scores.
Buying Credit Tradelines
There are many credit consulting and credit repair companies that sell credit tradelines. What these companies are doing are adding the customer as authorized users to their credit card accounts with high credit limits and low credit card balances in order to show credit tradeline payment history and boost the consumer’s credit scores. These companies are not cheap and I suggest that you do your due diligence before you spend your hard earned money in buying tradelines from these companies.