Tradeline is an industry term used to define a person’s credit status, history, and activity. Tradelines are developed by credit rating bureaus to determine the credit score of every individual. In this regard, they contain information on the various forms of credit that an individual may have. These includes mortgages, student loans, credit cards, and any other credit-related product extended by financial institutions.
Information Contained In A Tradeline
An important part of understanding how credit rating works is understanding the information that your tradeline contains. There are various data points that credit rating agencies will use to determine credit ratings.
Typically, the information that will contain in a tradeline include the various credit institutions that have extended credit to the applicant, the parties responsible for paying for the credit extended, the payment history (the various milestones), the dates the accounts were opened, the types of accounts, and the balance outstanding. This information is used by the credit rating agencies to provide a credit score, which is thereafter used individuals as super-prime, prime, near-prime, or sub-prime.
Critical Information In A Tradeline
Although tradelines contain a great deal of information, the most critical information that credit rating agencies are concerned with is the payment status and history. In this regard, credit rating agencies are interested in understanding how well you have been servicing your loans. For instance, they will look into whether you have been paying the loans you owe various creditors. Additionally, they will look into whether you are paying your loans on time as defined in the credit agreement.
With regards to late payment, they look into late you make payments, where you are grouped by the number of days of delayed payments, such as 30 days, 60 days, 90 days and so forth. In cases where payment has not been for longer, your credit may be classified as “Charge off.” Creditors assign this classification where they believe that their clients are unable to pay the credits that owe. Additionally, they may indicate that you are have entered bankruptcy when that is the case.
High Credit Score In Relation To Tradelines
High credit scores are awarded to individuals who have various tradelines active, and they are capable of servicing all of them. For instance, if you have had a mortgage, credit card, auto loan, and students loans for the last two years and you have never missed a payment, you will have a higher score. On the other hand, if you have missed payments you will have a poor credit score as a consequence.