Adding Credit Tradelines To Increase Scores To Qualify For Mortgage


Adding Credit Tradelines To Increase Scores To Qualify For Mortgage

Credit tradelines are creditors who report consumer credit and payment history to the credit bureaus.

  • Lenders consider a credit tradeline as a credit account consumers has established with a creditor
  • The creditor has reported it to the credit reporting agencies for at least 12 months to be considered a credit tradeline
  • Most lenders will require three credit tradelines seasoned 12 to 24 months
  • Some lenders will require credit tradelines that has been seasoned at least 24 months
  • Example of credit tradelines includes the following:
    • revolving credit accounts
    • auto loans
    • student loans
    • 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
    • This because these creditors do not report them to the credit reporting agencies
    • The three giant credit reporting agencies are the following:

Why Are Credit Tradelines Important To Lenders?

Credit tradelines are very important and lenders look at credit tradelines as a reflection of borrower’s previous payment habit and future payment risk.

  • The longer the credit tradeline is, the more weight it has for the lender
  • Lenders look at payment history very seriously
  • Will view a borrower who has a long history of timely payment history as a good risk
  • Will 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 lenders may have overlays on the amount of minimum credit tradelines required
  • 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 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, consumers with a bunch of closed out credit account with no credit for the past few years, the chances are they will have lower credit scores
  • If credit scores are very low, do not apply for any unsecured credit cards
  • This because consumers normally need a credit score of 700 to get approved for an unsecured credit card
  • The best way to developing credit tradeline on credit report with a low credit score and no credit is by getting a few secured credit cards
  • Each secured credit card will boost credit scores
  • As secured credit cards ages, credit profile will become stronger and stronger
  • Eventually the secured credit card company will grant a higher credit limit without asking card holder to put any additional funds
  • Secured credit cards can eventually become unsecured credit cards and card holders will start developing a good credit profile.

Adding Credit Tradelines As Authorized User On Somebody’s Credit Card Account

Another way of developing instant credit tradeline on 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
  • Need to make sure that the main credit card holder has an impeccable payment history
  • Equally importantly is that they have a low credit card balance
  • Adding yourself on as an authorized credit card user with someone with an excellent payment history can work if the authorized user has the same last name and/or billing address
  • However, if credit cards maxed out, this will hurt authorized user more than it will help
  • There are so many cases where I get borrowers who are authorized users on a credit card but the main borrower of the credit card has maxed out credit cards
  • I often need to request them to remove themselves out as authorized users due to maxed out credit cards or prior late payments
  • One late payment from the main borrower will also plummet the authorized user’s credit scores

Adding Credit Tradelines By Buying 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. They do this with hope in boosting the consumer’s credit scores. These companies are not cheap and I suggest that consumers do proper due diligence before they spend their hard earned money in buying tradelines from these companies. Often times, if authorized user does not have the same last name as the main user and/or does not have the same address, adding credit tradelines does not work.

Leave A Reply

Your email address will not be published.