# Understanding Trade Lines: Credit Reporting and Record-Keeping Explained

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## What Is a Trade Line?

A trade line is created on a borrower’s credit report to track all credit account activity. Each line of credit, such as a mortgage, car loan, student loan, credit card, or personal loan, has its own trade line. A trade line includes information on the creditor, the lender, and the type of credit extended. All relevant information is used by [credit reporting agencies](https://www.investopedia.com/terms/c/credit-reporting-agency.asp) such as Experian, Equifax, and TransUnion to determine your credit score. The data can impact new credit applications and your creditworthiness. So be sure to review it periodically to ensure it's valid and error-free.

### Key Takeaways

*   Trade lines are records of activity for credit extended to borrowers and are crucial for calculating credit scores.
*   Each credit account has its own trade line, which tracks payment history and other activity.
*   Key components of trade lines include creditor information, account details, and payment status.
*   Trade lines influence FICO credit scores, emphasizing payment history, amounts owed, and credit history length.
*   Reviewing trade lines regularly ensures accuracy and a strong credit profile.

## Understanding How Trade Lines Operate

A trade line is an important record-keeping mechanism that tracks borrowers' activity on their [credit reports](https://www.investopedia.com/personal-finance/consumer-credit-report/). Each credit account has its own trade line. Borrowers will have multiple trade lines on their credit report, each representing the individual borrowing accounts for which they have been approved.

The basic types of accounts with a trade line are those paid off in fixed installments, which are often broken into categories. First, revolving trade lines are reported on credit cards or other lines of credit. Second, installment trade lines report the history of car loans, mortgages, student loans, and personal loans. Open accounts, a third type of account on a trade line, are often associated with businesses rather than individuals.

> **Tip**
>
> Should a trade line be created in your name fraudulently, you can contact the credit reporting agencies to request the removal of that trade line from your credit history.

## Key Components of a Trade Line Record

Trade lines may include data about the creditor, lender, and type of credit. The trade line usually lists the creditor's name, account type, responsible parties, and payment status.

The trade line also includes account fundamentals like the credit's start date, credit limit, payment history, any delinquencies, and the total amount owed. If a consumer closes an account, that account will typically remain on their credit report as a trade line for up to 10 years, though the account can sometimes go away sooner.

Payment status indicates whether or not loan payments are being made on time and how late they are if they are not. If the payments are being made on time, the status will indicate that they are being made according to the terms of the credit agreement.

> **Important**
>
> The information included in your trade lines is used to calculate your credit score. Your credit score is a snapshot of creditworthiness, but lenders may want a detailed trade line report.

## Important Factors in Evaluating Trade Lines

Late payments are grouped by how many days they are overdue. For example, delinquencies may be reported as 30 days late, 60 days late, or 90 days late. The payment status may be set to “[charge off](https://www.investopedia.com/terms/c/chargeoff.asp)” if the creditor deems it unlikely that the debt will be repaid, and the status may also indicate that the credit recipient has entered bankruptcy.

Credit reporting agencies use trade lines to develop an individual’s credit score, so credit scores vary. Higher scores are generally given to individuals with more favorable trade line reporting. Credit scores consider the number and types of trade lines, account lengths, and payment history.

During underwriting, lenders may review a borrower's trade lines and credit score for their application.

### How Trade Lines Influence Your FICO Credit Score

When applying for credit, your lender will often request your credit score as part of the approval process. Your FICO score is directly determined from the information listed on each trade line. Below is [how your FICO score is calculated](https://www.investopedia.com/ask/answers/05/creditscorecalculation.asp) and how each section relates to trade lines.

*   **Payment History (35%):** Trade lines include debt or lines of credit that have been closed for up to 10 years.
*   **Amounts Owed (30%):** Trade lines are created for every line of credit. Each line of credit, revolving line, or installment agreement has its own trade line.
*   **Length of Credit History (15%):** Trade lines include every payment you've ever made against every account or line. This also includes every installment payment you've missed.
*   **New Credit (10%):** Trade lines are generally created within a month of the first payment on the associated line or account.
*   **Credit Mix (10%):** Trade lines are created for various types of accounts, including mortgages, car loans, credit cards, student loans, and personal loans.

## What Is a Trade Line?

A trade line is a summary of every revolving or installment credit you have. This detailed report outlines your creditworthiness by communicating to creditors and lenders your payment history, credit history, and delinquencies.

## What Is an Example of a Trade Line?

A trade line is created for every credit line you own. An example of a trade line is your car payment history. When you begin repaying a car loan, a trade line is created that summarizes your contact information, your current payment status, the date the line of credit was opened, and the date the line was closed.

The trade line will also report current information such as the date of your last payment, the current balance remaining, and your monthly payment amount.

## Can Trade Lines Hurt Your Credit?

Yes, trade lines can hurt your credit, but they can also help. Trade lines communicate to lenders your prior creditworthiness and detail how much debt you have, your current minimum monthly payments, and your historical payment delinquencies. Lenders are more likely to grant approval and better rates to borrowers whose reports show a good credit mix and on-time payment history, for example.

## How Do You Get a Trade Line?

A trade line is automatically created for you when a new credit line starts. For example, when you sign up for a new credit card, a new trade line is generated specific to that individual line of credit. As you incur purchases on the card and pay off debt balances, a record of history is created.

## How Long Do Trade Lines Last?

Trade lines typically appear on your credit report between 30 and 60 days after opening a new account.

Each credit reporting agency may have varying terms on how long a trade line is maintained. In general, a trade line is often kept on your account for 10 years after the trade line has been closed. Trade lines with a negative history are generally closed between seven and 10 years.

You can dispute trade lines for fraudulent or erroneous reports. After credit bureau agencies receive valid proof, these trade lines are often removed within 30 days of review.  

## The Bottom Line

Trade lines track the activity of credit accounts. Each credit account you have has its own trade line, which is reported to a credit reporting agency. A trade line includes data on the creditor, the lender, the type of credit extended, payment history, and account status, all of which contribute to credit scoring by credit bureaus. Lenders use it to evaluate your creditworthiness when you apply for a loan.

Get in the habit of reviewing your trade lines and credit score whenever you check your credit reports. Be sure all information is accurate and request corrections promptly to ensure a strong credit profile.

> **Article Sources**
>
> 1.  American Express. "[What Is a Credit Tradeline?](https://www.americanexpress.com/en-us/credit-cards/credit-intel/credit-tradelines/)"
>     
> 2.  Experian. "[What Does 'Closed Account' Mean on Your Credit Report?](https://www.experian.com/blogs/ask-experian/what-does-closed-account-mean-credit-report/)"
>     
> 3.  myFICO. "[What's in My FICO Scores?](https://www.myfico.com/credit-education/whats-in-your-credit-score)"
>     
> 4.  MyFICO. "[How Are FICO Scores Calculated?](https://www.myfico.com/credit-education/whats-in-your-credit-score)"
>     
> 5.  Experian. "[Why Is My New Credit Card Not Showing on My Credit Report](https://www.experian.com/blogs/ask-experian/why-is-my-new-credit-card-not-showing-on-my-credit-report/)?"