When was the last time you took a good look at your credit report? Maybe you’ve been afraid to look because your credit has been less than stellar.
You know that in some way, your credit report tries to define you. People make judgments and decisions based on what’s in your credit report. Even though you don’t want to look at it, you need to take steps to improve it.
You can do that once you know what tradelines are and how they work. They form the bulk of your credit report.
how do tradelines work and how do you find them on your credit report?
Keep reading to find out.
How Does Credit Work?
You know the importance of your credit score. There are a number of ways your credit score is determined.
There are credit reporting agencies or credit bureaus. The three big ones are Equifax, Experian, and TransUnion. These credit reporting agencies gather a lot of information about you. They collect information like your name(s), addresses, social security numbers, loans, credit cards, and public records like liens and bankruptcies.
That’s a lot of sensitive data. That’s why Equifax was taken to task when it experienced a major data breach a couple of years ago.
Whenever you apply for a credit card or loan, the lender or bank will report that to the credit agencies. They also report your account balance and payment history. They may report to one bureau or all three.
Another thing that happens is that the bank or lender will ask for a copy of your credit report to determine the creditworthiness.
They’ll look at your credit score or your payment history to determine whether or not they want to let you borrow money or get a credit card.
The Components of Your Credit Report
Now it’s time to look at your credit report. Don’t be afraid, this is the first step in cleaning up your report.
You want to make sure that you get your report from each reporting bureau. There may be slight variations between the agencies, and you want to make sure that you get the big picture of your credit.
You’ll see a list of accounts that you have opened and closed over your life. Guess what each line item is on your credit report is called? If you guessed tradelines, you’re right!
Tradelines will form the bulk of your credit report. You’ll also see the type of tradeline along with your payment record for each tradeline. You’ll also see how much credit you have available and how much you’re using.
It’s a little unnerving to know that a credit bureau has this much information about you. The first thing you want to do is review it for accurate information.
The credit agencies aren’t perfect, and it’s up to you to make sure that your report is accurate. About 20% of people have errors, so you want to make sure they get corrected.
Not many people are familiar with the term tradelines because it’s credit industry jargon. However, tradelines are the secret sauce to improve your credit report.
Improving Your Credit Report
After you review your credit report, you may be wondering how you can improve it. The place to start is to remove any inaccuracies from your report.
After that, you need to make sure that you take smart steps to improve your credit report.
Make Payments on Time
Do you have a track record of late payments? These late payments can have a negative impact on your credit, even if you’re late by a couple of days.
You may be able to get a couple of late payments removed from your report by contacting the creditor directly. If you show a history of being a good customer, they might do that.
The other way to lessen the impact is to make payments on time for years. You have to let time do its work and hope that the late payments diminish over time.
Add Tradelines
You may be in a position where you need to improve your credit report now. You might be ready to buy a home and need to improve your score before you do so.
One way to do that is to add tradelines to your account. How can you do that without damaging your credit? You can get added as an authorized user on someone else’s account.
When tradelines appear on your credit report, they’re for accounts that you opened yourself or you may be on the account with your partner or spouse.
You can add tradelines by getting added as an authorized user, which adds the tradeline and the entire account history on your credit report.
That can be a good thing as long as the account is in good standing. It may be enough to offset some of the damage you’ve done in the past.
You may not be able to get someone to agree to add you as an authorized user on their credit card. If that’s the case, you can buy tradelines.
Manage Debt
You can also clean up your credit report by paying down your debt over time. This can take years if you’re just making the minimum payments.
Try to reset your budget and put aside more than the minimum payment to pay down your debt.
How Do Tradelines Work on Your Credit Report?
Your credit report holds your entire credit history. Depending on your age, you may revisit old memories of places you’ve lived and the accounts you’ve had opened.
Beyond your personal history, your credit report also has tradelines, which are line items of credit accounts like loans and credit cards.
How do tradelines work? They have your payment history, account balance, and how much credit you’re using. That is the information that lenders use to determine your creditworthiness.
Do you want more financial tips? Take a look at the Building Wealth section for more financial help.