Are Tradelines Worth It? A Deep Dive into the Pros and Cons

More and more people are using tradelines as a quick way to raise their credit scores. But should you really buy tradelines? In this detailed guide, we’ll look at the pros, cons, legalities, and other options to give you a full picture.

What are Tradelines?

Any account that shows up on your credit report is called a tradeline. This includes credit cards, loans, mortgages, and more. The creditor’s name, account status, credit limit, balance, and payment history are all shown on each tradeline.

Tradelines are a key factor in calculating your credit score. More tradelines with positive payment histories and low balances can raise your score. Too few or negative tradelines can lower it.

With tradeline purchasing, you pay to be added as an authorized user on someone else’s credit card. This gives you the benefit of their positive payment history without being financially responsible for the account.

The Potential Benefits of Buying Tradelines

Quick credit score boost – Being added to an old account with a solid history can provide a big boost, especially if your own file is thin Scores can potentially increase by 50-100 points.

Establishes credit history – For those with limited credit history, purchased tradelines create an instant positive track record. This makes you appear less risky.

Increases total credit limits – Getting added to accounts with high limits, even if you can’t use them, reduces your overall credit utilization ratio. This factor accounts for 30% of credit scores.

Adds account mix—Tradelines let you spread out your credit between accounts that are revolving (like credit cards) and accounts that are fixed (like loans). This 10% factor improves credit diversity.

Fast process – It can take months or years to build credit naturally. Tradelines provide a short-cut for an immediate boost within weeks.

The Potential Downsides of Purchased Tradelines

Pricey—Prices change based on credit history and limit, but expect to pay $500 to $1500 per tradeline. Adding multiple can get costly.

Temporary – The effects fade when you’re removed as an authorized user after a few months. The account itself may stay on your report up to 10 years.

No substitute for credit skills – While scores may increase, you don’t learn responsible habits like making payments or limiting balances.

Legality concerns – While not explicitly illegal, the CFPB and FTC frown upon the practice as misrepresenting your creditworthiness.

Lender distrust – Many lenders view purchased tradelines as “gaming the system” and may deny applications because of them.

Scam risk – Sharing personal info like your SSN to buy tradelines poses identity theft dangers if dealing with unreputable sellers.

Credit freezing – Accounts you buy may become frozen if investigations detect suspicious authorized user activity. This could negatively impact the seller.

Score variability – Not all scoring models weigh authorized user accounts equally. For example, the FICO 8 model excludes them.

The Legality of Buying Tradelines

There are no laws explicitly prohibiting the purchase of tradelines. However, the Fair Credit Reporting Act does prohibit false or misleading information appearing on credit reports. Both the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have expressed concerns that purchased tradelines essentially “misrepresent” your true creditworthiness.

While rare, some cases of bank fraud charges have emerged when applicants fail to disclose purchased tradelines on credit applications. However, as long as you fully disclose any purchased tradelines if asked by lenders, you should avoid legal risks. But be aware that lenders may view your application unfavorably if they know you bought tradelines.

The CFPB has also warned that the practice may violate Equal Credit Opportunity laws by promoting discrimination. For example, low-income applicants may not be able to afford purchasing tradelines available to wealthier applicants.

Alternatives to Buying Tradelines

While purchased tradelines promise quick credit score fixes, responsible credit habits provide longer-lasting benefits:

Become an authorized user – Ask a family member or friend with a long positive history to add you to their account. Avoid paying them.

Open a secured card – These require a refundable deposit and help establish payment history.

Use credit builder loans – Make payments towards savings while simultaneously building credit history.

Pay down balances – Lowering credit utilization immediately improves credit scores as balances drop.

Dispute errors – Fixing mistakes on your reports provides a score boost. Monitor your reports regularly.

Practice good habits – Make on-time payments, keep balances low, and avoid unnecessary debt. Healthy habits over time are most effective.

The Bottom Line: Approach Tradelines Carefully

While purchased tradelines can provide a meaningful credit score lift in some cases, they come with substantial risks and drawbacks that make them questionable at best for many consumers. Improving through responsible habits takes longer but offers true skill-building and long-term benefits.

If you do choose to buy tradelines, exercise extreme caution in researching sellers, protecting personal information, and scrutinizing “too good to be true” deals. And avoid viewing purchased tradelines as a substitute for developing lasting positive behaviors.