about:blank

Table of Contents

• What Is a Trade Line?
• How It Works
• Records Included
• Special Considerations
• Frequently Asked Questions (FAQs)
• The Bottom Line

Trade Line: Definition, How It Works, and Included Records

By 

Julia Kagan

Updated July 22, 2024

Reviewed by Julius Mansa

What Is a Trade Line?

A trade line is a record of activity for any credit extended to a borrower and reported to a credit reporting agency such as Experian, Equifax, or TransUnion. A trade line is established on a borrower’s credit report when a borrower is approved for credit. The trade line records all of the activity associated with an account.

Credit reporting agencies use trade lines to calculate a borrower’s credit score. Different credit reporting agencies give differing weights to the activities of trade lines when establishing a credit score for borrowers.

Key Takeaways

• A trade line is created on a borrower’s credit report to track all account activity.
• A trade line is created for every line of credit or account a debtor has, such as a mortgage, car loan, student loan, credit card, or personal loan.
• Trade lines include information on the creditor, the lender, and the type of credit given.
• A closed credit account will generally remain on a trade line for seven to 10 years.
• A trade line includes all relevant information used to determine your credit score, so it is important to review it to ensure all information is valid and error-free.

How a Trade Line Works

A trade line is an important record-keeping mechanism that tracks borrowers’ activity on their credit reports. 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.1

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.

Records Included in a Trade Line

Trade lines may contain various data points related to the creditor, the lender, and the type of credit being provided. The trade line often includes the name of the creditor or lender, the account or another identifier for the type of credit being provided, the parties responsible for paying the loan, and the account’s payment status.

The trade line will also contain particular account milestones, such as the date the credit was extended, the credit limit, the payment history, all delinquency levels if any missed payments have occurred, and the total amount owed as of the last report. 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.2

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 scores. While your credit score is a summarized snapshot of your creditworthiness, lenders may request to see a detailed report of your entire trade line.

Special Considerations

Late payments are usually grouped in a range of days according to how late they are. 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” 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. Factors considered when calculating the credit score include the number of trade lines, types of trade lines, lengths of open accounts, and payment history.

Lenders may analyze a prospective borrower’s trade line reporting and credit score when considering their credit application during the underwriting process.

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 and how each section relates to trade lines.3

• 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.4

Frequently Asked Questions (FAQs)

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