How Much Can a Tradeline Boost Your Credit Score?

A tradeline is an entry on a credit report detailing an account, such as a credit card or loan. When an individual becomes an authorized user on another person’s credit account, this status establishes a tradeline on their own credit report. This article explores how this type of tradeline influences an individual’s credit score and the factors determining its impact.

Understanding Tradelines and Their Credit Impact

An authorized user’s tradeline appears on their credit report, reflecting the history and characteristics of the primary account. This inclusion allows the authorized user to benefit from the primary account’s positive credit behavior. Credit scoring models, such as FICO and VantageScore, evaluate several key factors to determine a credit score, including payment history, amounts owed (credit utilization), and length of credit history.

When a primary account holder consistently makes on-time payments, this positive payment history can be reflected on the authorized user’s report. Payment history is a significant component of credit scores, often accounting for 35% of a FICO Score. If the primary account maintains a low credit utilization ratio—the amount of credit used compared to the total credit limit—this can also positively influence the authorized user’s score, as utilization accounts for about 30% of a FICO Score. The age of the primary account contributes to the authorized user’s length of credit history, which can make up 15% of a credit score.

Factors That Maximize Your Credit Boost

The extent to which a tradeline can improve a credit score depends on specific characteristics of the primary account and the authorized user’s existing credit profile. For the most significant credit score improvement, the primary account holder must demonstrate excellent credit health. This includes a consistent history of timely payments and maintaining low credit utilization, ideally below 30% of the available credit limit.

The age of the account is another influential factor; older accounts with a long record of positive payments are generally more impactful. Accounts aged between 6 to 10 years often provide a substantial boost. A higher credit limit on the primary account can also be more beneficial for the authorized user. This is because it increases the overall available credit, contributing to a lower credit utilization ratio for the authorized user.

Revolving credit accounts, such as credit cards, are commonly used for tradelines and tend to have a more direct impact on credit utilization, a key scoring factor. Finally, the authorized user’s existing credit profile plays a role in the potential score boost. Individuals with a “thin file”—limited or no credit history—or those working to rebuild damaged credit may experience a more significant improvement compared to someone who already has an established and strong credit history.

Situations Where a Tradeline Provides Minimal or No Benefit

While a tradeline can be a tool for credit improvement, there are scenarios where its impact may be minimal or even detrimental. If the primary account holder exhibits poor credit behavior, such as making late payments or carrying high credit utilization, these negative marks will typically be reflected on the authorized user’s credit report. This can potentially harm the authorized user’s credit score.

A newly opened account used as a tradeline will generally have less impact than a seasoned one. Credit scoring models value the length of credit history, so a new account does not provide the benefit of an established track record. If an authorized user already possesses an excellent credit profile, adding a tradeline may not yield a noticeable boost. Their score is likely already near its maximum potential, and the additional account may not significantly alter their positive metrics.

Credit bureau policies can vary; not all credit bureaus weigh authorized user accounts equally, and some may have specific criteria for reporting or including them in scoring models. Engaging with services that sell tradelines from unknown sources, often marketed as “credit repair” schemes, can be ineffective and carry risks. These arrangements may not provide the intended credit boost.

Becoming an Authorized User

To become an authorized user, the primary account holder initiates the process by contacting their credit card issuer. This can be done online through the issuer’s website or mobile app, or by calling customer service. The primary account holder needs to provide information about the prospective authorized user, including their full name, date of birth, and Social Security number. Some issuers may have age requirements, such as a minimum age of 13 or 15.

Once the authorized user is added, a physical credit card may be issued in their name, allowing them to make purchases. However, the primary account holder remains solely responsible for all payments and any debt incurred on the account, including charges made by the authorized user. After the authorized user is added, the account’s history, including payment activity and credit limit, is reported to the major credit bureaus under the authorized user’s name. This reporting can begin to appear on the authorized user’s credit report within 30 to 45 days.