A trade line is the term credit companies use to report an account on your credit report. It may be credit card accounts, mortgages, or personal loans that are written in this section.
It is an essential part of all credit reports. To build a good report, you need to learn about the types of trade lines, what information each one includes, how to use them and how long they will be on your report.
The importance of checking your tradelines
Periodically, you should review your credit reports to fix any errors or to highlight the points where they are affected. The commercial lines are the first thing to evaluate in the news, which will indicate if there are overcharges or errors in the information of the report.
You have the possibility of requesting the elimination of a commercial line when necessary, for example, if an account that you did not open is indicated. It is also possible to request the correction of the information if you have already paid delinquencies.
Can I reduce the commercial lines on my credit report?
Yes, you can, but it is not recommended. Almost no trade lines on your report indicate that you are not a qualifier or have a thin credit file. Both of these options will prevent you from enjoying a good credit score.
It’s best to have more than three trade lines, which will be enough to get you out of the thin-file territory. If you don’t feel confident opening new accounts or applying for credit cards, you can ask your family members or spouse to add you as an authorized user of their credit cards.
Having commercial lines is an effective solution when parents want to help their children build a good credit score at an early age, in addition to teaching them how to keep their finances in order and the importance of avoiding going over credit limits or not making payments on time.
Some financial agencies even offer additional commercial lines to improve your score; they may allow you to add phone, transmission, and utility payments to improve your credit report.
Buy commercial lines?
Some companies offer you “credit consumption” services where you pay a stranger to rent you their business line, which will show up on your account and help increase your credit score.
In theory, it is the best solution. However, financial specialists warn that it is a deceptive practice that can get you into a lot of trouble. According to experts, you will be cheating the system, thus committing fraud.
Types of commercial lines
There are three commercial lines; different factors influence you to have one or another. The division would be:
- Installment loans include personal, auto, student, and mortgages. Although for some specialists, mortgages are a fourth category
- Revolving accounts: here are classified the lines of credit or credit cards; they are considered revolving because both the balance, the payment due, and the available credit usually change as you make purchases and payments
- Open accounts: these are accounts that you pay in full when a buyer receives merchandise or other items of value. Commonly, these are accounts held by businesses
How do commercial lines affect the credit report?
Earlier, we mentioned that having at least three commercial lines on your report is advisable. However, it is not advisable to overload it. Having too many tradelines can negatively impact your credit score.
There is no specific number of commercial lines recommended. Unfortunately, this is not information offered by the rating companies. But try not to have more than six or seven commercial lines to get a better score.