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What Is A Tradeline?
A tradeline refers to any account listed in your credit report, which can include mortgages, auto loans, student loans, and credit cards. These tradelines play a crucial role in determining your credit score, and effectively managing them is vital for achieving financial success.
You can add tradelines to your credit profile in several ways, such as applying for a credit card or taking out a loan. To establish a strong credit history over time, it's best to open your own primary tradelines and maintain them by consistently making timely payments.
However, when you open new accounts—especially if your credit history is limited—these accounts may have no age and often come with low credit limits, potentially leading to a temporary dip in your credit score. An alternative option is to add an authorized user tradeline to your credit report, which can help bolster your credit profile more effectively.
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A seasoned tradeline is an account that has consistently been paid on time over several years. The longer the account has been active, the more beneficial it is, as payment history is a key component of your credit score.
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Your credit report consists of tradelines that reflect whether accounts have been paid promptly. Consequently, having well-maintained seasoned tradelines is crucial for maintaining good credit.
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An authorized user tradeline involves being added to another person's seasoned account, allowing the positive payment history of that account to appear on the authorized user's credit report.
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When someone is added as an authorized user to a seasoned tradeline, the credit report will not indicate when the addition occurred; however, the entire history of that account, including its age and credit limit, will be visible on the authorized user's credit report.
An authorized user tradeline (AU tradeline) refers to an account where you are designated as an authorized user, meaning you bear no financial responsibility for charges made on that account. For instance, parents often add their children as authorized users on their credit cards.
When you become an authorized user, the complete history of that account typically appears on your credit report. This happens because credit reports generally do not indicate the date when someone was added as an authorized user. Consequently, once you are added, your credit report can reflect several years of positive payment history associated with that account. This practice of acquiring an AU tradeline through family or friends is a common method for individuals looking to build their credit profile.
However, there are risks associated with being an authorized user on someone else's credit card, depending on how the primary account holder manages their credit. If the account has negative attributes, such as high utilization or late payments, it can adversely affect your credit history. Additionally, not everyone has the chance to be added as an authorized user on a relative’s or friend's account.