Credit Tradelines: What Are Tradelines?
Credit tradelines are very important and most mortgage lenders require a certain amount of credit tradelines that has been seasoned for 12 to 24 months. Credit tradelines are credit accounts that you have established from a creditor such as a credit card company, student loan provider, automobile finance company, mortgage company, pay day loan company, personal lines of credit, or any other creditor and that creditor reports it to all three credit reporting agencies. When these creditors report your account payment history to the credit bureaus, the credit bureaus will update your payment history every month either as being paid on time or not as well as the original credit limit, when it was opened, and what the current balance is. This information is then used by creditors such as mortgage lenders to determine your credit risk by reviewing your credit history and payment history from various creditors. The longer your credit tradelines are the more secure your potential new creditor will feel because your prior payment history is a good indicator of your future payment on the credit they will be giving you.
Adding positive credit tradelines is an absolute must for your to get a solid credit score and make the mortgage approval process much smoother.
Adding Credit Tradelines To Your Credit Report
1. Apply for new credit accounts: If you have descent credit, you may try applying for unsecured credit cards. Remember that everytime you apply for new credit, you will get a hard credit inquiry reported on your credit report and each hard credit inquiry can drop your credit scores by 2 to 5 points so do not apply for a dozen credit cards. Applying one to three credit card applications will be ideal and the positive credit score improvement you will get by getting the new credit cards will offset the drop of the hard credit inquiry. A department store credit card, gas credit card, pay day loans, automobile loans, and other credit where the creditor will report it to the three credit bureaus will help you start developing credit tradelines. If you had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, or you have had recent bad credit, you should start re-establishing credit immediately by opening up three secured credit cards with a minimum of $500 credit limit. Secured credit cards are the best tools in this planet to get new credit tradelines for those with prior bad credit. Each secured credit card will boost your credit scores by at least 20 or more FICO POINTS!!!!
Credit unions, furniture stores, jewelry store, auto finance companies, gas stations, and pay day loans are some of the creditors with lighter credit requirements than unsecured credit cards. These creditors will be ideal places to apply for new credit tradelines if you do not have strong credit or established credit tradelines.
2. Non reporting credit tradelines: Not every creditor report your credit to all three major credit bureaus: Experian, Equifax, and Transunion. If this is the case, you can request your creditors and the three major credit bureaus to update your credit file to reflect your credit and payment history.
3. Nontraditional credit can be used as credit tradelines if reported to credit bureaus: You can use nontraditional credit in lieu of traditional credit tradelines. What are nontraditional credit? Nontraditional credit is credit that you make regular payments but the creditor does not report it to the three major credit reporting agencies. Examples of nontraditional credit are water bills, electric bills, gas bills, phone bills, insurance bills, rental payments, lease payments, and cell phone bills. 12 months of cancelled checks are required for nontraditional credit tradelines to be valid and for the mortgage lender to be able to use it.