Building credit is one of the most frustrating activities for young adults (and adults generally). You can’t get loan unless you have a good credit score. But you can’t build a good credit score without access to credit products and services. So what are you supposed to do?

 

One of the secrets to building credit isn’t using your credit. It’s using other people’s credit to demonstrate your creditworthiness.

The idea sounds a bit strange, but it’s a hack that people with excellent credit have been using for years. The process is called ‘piggybacking tradelines,’ and it works.

What is a tradeline, and could it be the secret to your excellent credit score? Keep reading to find out.

What Is a Tradeline?

A tradeline is your record of credit activity, as reported to credit reporting agencies. It details everything associated with an account: the date opened, balances, payments, late payments, date of last activity, date closed, and more.

You have a tradeline for every credit account you have. So if you have three credit cards, a mortgage, a car loan, and student loans, then you have six credit trade lines.

How Are Tradelines Used?

Credit bureaus don’t collect data for the sake of it. They use all this data to calculate your credit score. In turn, lenders use the credit score generated by those tradelines to generate your creditworthiness, i.e., whether you qualify for new or better credit product offers.

What are some of the red flags on tradelines?

Missed payments are a big deal. If you received a credit line, then you can borrow what you want up to the balance, but you need to pay it back. Your willingness to borrow and not make payments could trash your credit score.

For example, Experian says that a single late payment can impact higher credit scores worse. A score of 780 could drop by 90 to 110 points with a single missed payment, even if it’s the first time you ever missed one.

High revolving balances can also damage your credit score. Maxing out a card with a $1,000 limit isn’t a serious red flag, but maxing out a card with a $10,000 limit and applying for a new one is.

How New Borrowers (or Improving Borrowers) Can Use Tradelines

Now that you understand tradelines, you see why it’s so hard to get credit when you have no or low credit. Having more tradelines gives credit bureaus a better picture of your creditworthiness (via your credit score), which they, in turn, share with lenders.

However, if you are a new borrower, you don’t need to fight tooth-and-nail to get a credit card. You can use tradelines to your advantage.

You probably know people who do just this. If you have a friend who’s on their parent’s credit card account, then you’ve seen it in real life.

By getting on their parent’s account, they have access to better credit products regardless of your friend’s credit history (or lack thereof). At the same time, they benefit from the tradeline reporting to build a positive credit history (as long as they pay their bills).

What If You Don’t Have a Tradeline Buddy?

If you don’t have a family member or friend willing to help, then you have two options.

The first is to work with the no-to-low credit products available to you: secured credit cards, store credit cards, etc. These build credit slowly but solely in your name. Additionally, it’s important to remember that credit bureaus now count your bills when they consider your credit. Paying your cell phone, internet, or other monthly credit bills will also help you build credit.

Another option is to expedite the process by buying or piggybacking tradelines. Yes, you can buy your way onto someone’s credit card account and become an authorized user. The process is mostly the same as if you wound up on your parent’s account. You get the card, use it, and pay the bills. In return, you get a tradeline that builds credit.

Does Buying Tradelines Still Work?

Buying tradelines is both legal and still popular. But if you have struggled with credit for a while, you might wonder whether it’s still a viable method.

Yes, buying tradelines still works because large lenders, like American Express, Chase, and Bank of America, confirm that they still report the tradeline for authorized users to credit bureaus.

However, your success depends on the lender and the credit bureau. Credit bureaus tend to be secretive about their reporting. However, industry insiders say that some use an algorithm to exclude tradeline accounts with no relationship to the primary account holder.

In other words, they report tradelines when the account features a primary account holder and authorized user who are mother and daughter. However, if you are strangers, then you may get ruled out automatically. At the same time, the same bureaus say that you should try a friend instead, who you also have no legal relationship with. So, the reality of the situation remains unclear.

Don’t Rely on Tradelines Alone

Either way, you shouldn’t rely on tradelines alone. One tradeline can help you build credit quickly when you don’t have other options. However, there are risks involved.

For example, if the primary account holder stops paying their bills, then your credit tanks, too. Additionally, you want a mix of credit products, not just revolving accounts.

Finally, the best tradelines are those where you are the primary account holder. So, don’t get so focused on using someone else’s tradeline that you wind up being unable to get your own.

No matter what method you choose, be sure you do your research to find out more about piggybacking tradelines before you make a purchase.

Tradelines Explain Your Credit Score

What is a tradeline? It’s the report sent from your lender to the credit bureau that includes the relevant details on your account. Tradelines are also the basis of your credit score, which grants you access to more products.

You can use tradelines to your advantage by buying or piggybacking on tradelines. These can buy you the short-term boost you need to improve your credit. However, you should be careful. Buying tradelines can be expensive, and it isn’t a guaranteed path to excellent credit.

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