To achieve your goal of receiving a higher credit score, you should seriously consider adding trade lines to your credit report. But how? And what are these items all about? Let’s find out.
A Closer Look at Trade Lines
A trade line is a credit account found in your annual report. It can take the form of a credit card, a personal loan, and even an account with a utility service provider. The issuers of your trade lines are expected to submit reports of your credit and payment activities to the three credit reporting agencies. That way, you can jump-start and gradually build your credit profile.
You need to responsibly manage each trade line. After all, the manner by which you handle each account can influence your credit score as well as your financial prospects.
Excellent Pointers for Consumers
- There are plenty of trade lines you can apply for. You can opt to get a mortgage, car or personal loan, a prepaid, secured or unsecured credit card, and other credit deals. Still, you should see to it that your chosen firms work closely with the three major credit trackers. Otherwise, you might be surprised that your credit and payment activities failed to help you build and maintain a solid credit profile.
- Did you know that your receipts and proofs of payment can help validate the items listed, not just in your monthly billing statements, but even in your annual credit report? In fact, you can use them as references when disputing erroneous items and outdated accounts in your credit files. So, make it a habit to keep them with your other important financial documents. That way, you can simply take them out when a sudden need arises.
- Taking out a trade line is just one part of the equation. It is also important that you manage your existing credit accounts in the best way you can. After all, this can be instrumental for you to attain your target credit rating. To do this, you can simply settle your dues completely and prudently. You should also remind yourself to spend within your credit limit. Finally, you should set a limit to the number of credit accounts you will apply for and manage.
- Do you have old and inactive lines of credit? If you do then, it would be wise to close down some of them. Bear in mind that your old accounts can still influence your credit standing. In fact, they can cause your credit utilization to rise and pull your score down. Hence, if you don’t have plans to use them again, it would be best to get rid of them in your annual credit report.
Why Maintain a Good Credit Standing
Always remember that your chances of qualifying for affordable credit programs are actually tied to your credit rating. After all, credit agencies, in general, are only willing to extend low-interest credit programs to consumers they deem as good credit risk. Hence, to receive instant approval on your request for a line of credit then, you should do your best to maintain a solid credit profile.
It is also good to note that a good credit history can be an effective tool for negotiating for low interest rates, flexible payment terms, and less fees and charges. So, you should never disregard the power that it could provide credit applicants, like you.
Examples of tradelines:
* Installment loans
Bad Credit Car loans are a good example of an installment loan. Your current car loan may already be in your report, but what about car loans past? You can add a former car loan that was appropriately repaid onto your current report, adding favorably to your overall score.
In-store accounts for items like refrigerators, washer/dryers, and jewelry that are being paid for on an installment plan should also be included on your credit report if you are making your payments according to schedule. Many of these smaller stores only report to the credit bureaus if an account is placed in collections, ask them to send in a report of your payment history to add a positive tradeline to your credit report. Make sure the creditor notifies all three credit bureaus.
Again, a current mortgage would likely be listed already, but if this is not your first mortgage, and you have other successful mortgages in your financial past, make sure they are listed. This all still weighs in your favor. If you have paid your mortgage on time with an individual who holds the lien to your home, you should get credit on your credit report for it. Most individuals would be fairly baffled at your request to add a manual tradeline to your credit report, simply write the three credit bureaus and ask that they account be added and give your point of contact’s name and phone number for verification. The bureaus will verify the information and have it added to your credit report. Repeat this process a few times a year to keep your information current.
* Secured Loans/Secured Credit Cards
These are types of tradelines that you have secured by putting up something as collateral, such as your vehicle or home. You can obtain a secured credit card by depositing a pre-determined amount of money in an account with the individual company. You can then use that credit card to charge up to that amount and your deposit guarantees the company of being repaid, even if you miss a payment. Secured accounts are a viable way to rebuild credit after a bankruptcy, as long as you pay on time.
* Utility Accounts
Do you pay your monthly utilities in full and on time? Then try to add them to your credit report. Utilities usually only find their way onto your report if you’re behind in your payments. Paying these items faithfully each month should boost your credit record, but if your local utility companies don’t actively report in to the credit bureaus via a tape system the firm may decline your request to add your history to your credit report. Most will comply and the benefit of having a positive tradeline on your credit report makes it well worth the try.
While there is really no substitute for paying your debts on time each month, it’s good to know that there are ways to improve your credit report. The key is knowing what’s in your report, and making sure it’s kept accurate.