Mistakes to Avoid When Buying a Tradeline

Are you looking for a way to improve your credit? Depending on your financial and personal circumstances, it can be tough to do so. It might be so tough that you’re considering slightly higher-risk options, such as buying tradelines.

While buying tradelines can be a reasonable way to boost your credit, it’s important that you only do so correctly and avoid some costly mistakes. 

What is a Tradeline?

A tradeline is a record of activity for a type of credit that you have. Tradelines apply to any and every type of credit that extends from a lender to a borrower. For example, for every credit card you have, you’ll have a tradeline. Another characteristic of tradelines is that they are reported to a credit reporting agency. The tradeline’s main purpose is to track all activity (i.e. every transaction) under the borrower’s account.

A common type of tradeline are authorized user tradelines (also known as AU tradelines), which allows the borrower to add someone else onto their tradeline (this person being the authorized user). This person shares the credit history but doesn’t bear the responsibility of repayment. Becoming an authorized user can help to boost someone’s credit score without as much burden of taking out their own credit account. For instance, a parent may bring their child onto their tradeline as an authorized user to help them start building credit on the right foot.

How Does Buying a Tradeline Work?

 For some people, having a loved one or a family member add you to their tradeline isn’t an option. Maybe you don’t have many family members, or the ones you do have aren’t in a financial position to bring on an authorized user. In this case, you may need to turn to more unorthodox means of improving your own credit via tradelines: buying one from someone else.

The process of buying a tradeline is fairly simple: you pay someone to add you as an authorized user on their tradeline. This process is also sometimes known as piggybacking or renting a tradeline. This seems like a quick and easy fix, but that’s not always the case. There are some complications that could arise when buying tradelines. 

The Potential Issues with Buying Tradelines

There are several potential problems that could come up when and if you decide to buy a tradeline. For one, you could experience some threats to your financial well-being. It may seem counterintuitive; after all, your main objective in buying a tradeline is to ameliorate your financial standing, isn’t it?

Buying tradelines can be extremely expensive. Depending on who you try to purchase from, you could be shelling out thousands of dollars to be added to someone’s tradeline as an authorized user. The amount you’ll spend will likely depend on the age of the account as well as the credit limit on the account. If you’re not in a financial position to be comfortably spending that much money, you might experience some undue stress and further repercussions.

Additionally, there’s a chance that this significant investment may not even pay off. Specifically, there is no guarantee that buying a tradeline from somebody will improve your credit as you hope it might. This could happen for a variety of reasons: the main account holder may manage the credit account poorly, the credit company could close down, the main borrower could remove you whenever they please. Buying a tradeline could also be seen as a form of fraudulent activity to credit agencies and bureaus. 

Is Buying Tradelines Legal?

Buying tradelines represents a legal gray area, making it quite risky. While there’s nothing stating that the process is outright illegal, you could very well encounter some legal issues If you do proceed with this.

As we mentioned, it could be viewed as fraudulence to credit agencies. These organizations may claim that you were intentionally misrepresenting your credit trustworthiness to the credit bureau, which could then lead them to make financially unsound loan decisions. If you’re not careful, this could land you in some seriously hot water down the line, potentially jeopardize your financial well-being, and put you at risk of not getting loans in the future.

Mistakes to Avoid

Now that we’ve discussed the context around tradelines, buying tradelines and the concerns to watch out for, let’s get into the mistakes you need to avoid if you decide to proceed with purchasing a tradeline.

1. Not Doing Your Research On Your Own Credit Score

When was the last time you checked your credit score? Was it when you were in college in a pile of student loan debt and forgetting to meet your monthly minimum payments? Back then, your credit might have been less than ideal. However, if you’ve managed to land a steady job, paid off your student loans in full and you pay your other bills on time, you may have much better credit than you recall. Don’t rush into buying a tradeline before you properly research your own credit score. If you do, you’ll be making a blind decision rather than an informed decision based on context.

2. Not Understanding Tradeline Basics

Hopefully, if you’ve made it this far, you understand the basics of tradelines, how they can be used to improve credit and the risks of buying tradelines. If you’ve only skimmed, however, we encourage you to scroll back up and have another look. Knowing the essential information surrounding tradelines is vital to knowing if buying one is the right move for you. 

3. Not Exploring Alternatives

Given the previously mentioned potential issues, buying a tradeline to improve your credit shouldn’t be a first stop. Instead, try researching alternative methods of boosting your credit that aren’t so risky, such as opening your own tradeline under your name or asking a relative or loved one to add you to their tradeline as an authorized user. 

At the end of the day, financial decisions of all kinds carry their own degree of risk, including buying a tradeline. However, if you make any of these costly mistakes, you could significantly increase these risks and threaten your overall financial wellbeing. Steer clear and you should be on the path to bettering your credit in no time.