What Is a CPN?

July 16, 2019CreditBy toptierfinancial

What Is a CPN?

“CPN” or “CPN number” can stand for credit privacy number, credit profile number, or consumer protection number. A CPN is a 9-digit number that is often marketed as a replacement for your social security number (SSN).

Some sources claim that celebrities and government officials use CPNs to maintain their privacy, since SSNs are linked to a lot of personal information, but there is no documented legitimate source for a CPN. The Social Security Administration is the source for all SSNs and the Internal Revenue Service (IRS) is the source for all Employer Identification Numbers (EINs). These organizations do not issue CPNs and no other government entities issue such numbers.

You may have seen some businesses claim to sell CPNs as a way for consumers with poor credit to apply for credit with a “clean slate.” Since the CPN is a different number than your SSN, it does not have your credit report associated with it. These companies would like you to believe that you can purchase a CPN and use it instead of your SSN on credit applications, thereby hiding your credit history from creditors.

A CPN might sound like a good solution if you have concerns about privacy or if you have had trouble with your own credit and want to “start fresh.” However, you should exercise extreme caution when dealing with anyone trying to sell you a CPN. Keep reading to find out why.

How Do CPNs Work?

Sellers of CPNs often claim that the use of these numbers is permissible thanks to the U.S. Privacy Act of 1974. This act allows people to withhold their SSNs on documents if providing an SSN is not expressly required by federal law.

Since the federal government does not require that consumers provide SSNs on credit applications from private companies, you are free to withhold your SSN—however, the creditor is also free to deny you credit without this information. The U.S. Privacy Act of 1974 does not permit the use of CPNs on credit applications, contrary to what some credit repair companies would like you to believe.

The reason some people can get away with using false SSNs sold as CPNs on credit applications, instead of their real SSN, is that lenders sometimes fail to cross-verify applications thoroughly enough to confirm that the name on the application matches the listed SSN.

Although you may encounter many businesses offering “clean” CPN numbers for sale, they won’t tell you where these numbers came from or how they were obtained. They cannot provide legitimate documentation on where these numbers originated from.

Some sellers falsely claim that they have attorneys who can request a CPN number application from the government for you, but since the government does not issue CPNs, this is impossible. In reality, there are two ways that disreputable companies obtain so-called CPNs, both of which are illegal:

They use real SSNs that have been stolen from other people, often from children, the elderly, deceased people, homeless people, or those who are incarcerated. Scammers target these demographics because they are less likely to notice that their SSNs have been compromised. If someone promises to sell you a CPN that has a certain credit score or credit report, this is a big red flag that it is actually an SSN that has been stolen from someone else.
They create new, fake social security numbers that have not yet been issued by the United States government. They do this by using algorithms to generate 9-digit numbers and checking them against online databases to see which numbers can successfully pose as SSNs. They then sell these numbers as CPNs to unsuspecting consumers.

How to Get a CPN

The truth is that there is no legitimate way to obtain a CPN because CPNs are not issued or recognized by any government agency. As described above, the only way to get a CPN is to purchase a stolen or fake social security number on the black market.

While credit repair agencies and other companies who sell them may appear legitimate, there is nothing legitimate about buying a fraudulent SSN, which is what a CPN is. An SSN is a government identifying number and the government does not “sell” these numbers or offer CPN applications.

Some businesses may alternatively try to sell you an EIN, or employer identification number, promising that EINs are a legitimate form of CPNs. Although the IRS does issue EINs, these are exclusively for business use, which means that an individual hoping to improve their credit cannot legally use an EIN in place of their SSN.

In addition, according to the IRS, “EINs are issued for the purpose of tax administration and are not intended for participation in any other activities.” Businesses can obtain loans associated with their EIN number, but individuals may not use an EIN as an alternate SSN to obtain a personal loan.

The Social Security Administration has the authority to assign new SSNs in extreme cases, but the requirements are strict. You can only get a new SSN if your life is in danger or if you can prove that someone has stolen your number, is actively using it, and is causing you significant continued harm.

If you do get a new SSN, your new number is still linked with the credit from your old number, and they both receive special indicators that help alert creditors of this change, so this would not work as a way to leave your credit history behind.

Credit Privacy Numbers: Are They Legal?

To find out whether CPNs are legitimate and legal, we can go straight to the highest authority to see the official policy in writing. In this case, the highest authorities are the Federal Trade Commission (FTC) and the Social Security Administration (SSA). The FTC is a federal agency that polices business activities to help protect consumers and the Social Security Administration (SSA) is the agency that administers all Social Security-related programs, so these are the governing authorities when it comes to consumer protection, identity theft and fraud. The policies of these federal institutions override any other opinions or lower-level organizations.

According to the FTC, “It is a federal crime to lie on a credit or loan application, misrepresent your Social Security number, and obtain an EIN from the IRS under false pretenses.”

Clearly, using a CPN on any credit or loan application that asks for your SSN is misrepresenting your social security number. Therefore, engaging in this action is an act of fraud. There are many credit repair companies and other businesses who appear to be legitimate offering to sell you a CPN, but the bottom line is that if you misrepresent your SSN, you are committing a federal crime. This is verifiable in writing straight at the source, from the highest governing agencies.

The Federal Trade Commission has issued warnings against companies that sell CPNs to those looking to improve their credit, labeling such practices as scams. Here is what the FTC has said about CPNs:

“The credit repair companies may tell you to apply for credit using the CPN or EIN, rather than your own Social Security number. And they may lie and tell you that this process is legal. But it’s a scam. These companies may be selling stolen Social Security numbers, often those taken from children. By using a stolen number as your own, the con artists will have involved you in identity theft.”

If you follow this advice and use a CPN instead of your SSN on a credit application, you would be committing fraud, and you could face some serious charges and prison time.

The Social Security Administration has also been very clear about their official stance on CPNs:

“The proliferation of Credit Privacy Numbers (CPNs) is a relatively new SSN misuse scheme and a threat to the security of child identity information… Despite what many of these credit repair websites imply, consumers should know that CPNs are not legal.”

Boosting Your CPN Credit Score

Credit repair companies that sell CPNs and CPN tradeline packages often say that it is easier to “boost” the credit scores of CPNs and allow you to essentially hide bad credit that may be associated with your real SSN. While this tactic is becoming more common, the fact that it is happening does not make it legal. Hiding previous bad credit by using a replacement SSN is misrepresenting your identity and is considered fraud on a federal level.

It is not surprising that the lure of buying a CPN and starting over with a clean slate appeals to many people. When consumers encounter misinformation circulated by disreputable companies and hear about others having success using CPNs, it is easy to see how someone could fall for this trap and unknowingly participate in fraud. Unfortunately, the idea of using CPNs as a quick fix for credit is indeed too good to be true.

The sad fact is that ignorance is no excuse for breaking the law, and blaming the company for selling illegal services does not make the consumer immune to the potential consequences. If someone does decide to purchase a CPN and use it instead of their SSN, they are creating a verifiable paper trail of this action that could come back to haunt them many years down the road, since records would be created every time a person uses this tactic.

CPNs and Synthetic Identity Fraud

The use of CPNs has contributed to a new form of fraud called synthetic identity fraud, also known as synthetic identity theft. Synthetic identity fraud is the criminal practice of creating fake personas through a combination of real and fictitious data.

For example, scammers could combine the address of one person with the phone number of another and the SSN (or CPN) of a third. This false identity is then used to open credit accounts and make thousands of dollars in fraudulent purchases, followed by defaulting on payments. Since the fraudulent account is not linked to a real individual, it is difficult to track down the perpetrator and collect the debt.

It is estimated that this type of fraud causes billions of dollars in losses annually. Worse still is the damage it causes to victims whose identities are compromised.

This is where CPNs come into play. As we have seen, many CPNs sold to consumers are actually SSNs that belong to real people, especially children. Individuals seeking to “repair” their credit combine these stolen SSNs with their real name to essentially create a synthetic credit profile.

When criminals, or even unsuspecting consumers, use a child’s SSN to obtain credit and then default on the debt, this leaves lasting negative marks on the child’s record. When the child becomes an adult, they will face suspicion from lenders and difficulty obtaining credit due to the delinquencies on their record. They may not even be aware of the crime until they need to use their SSN for financial reasons as an adult. For example, they may apply for student loans and be denied as a result of the bad credit associated with their SSN.

The credit industry and the federal government are increasingly focusing on ways to crack down on this new type of fraud. In 2017, the FTC and the U.S. Government Accountability Office both convened groups of experts to discuss how to combat synthetic identity fraud going forward. According to the Department of Justice, U.S. Attorneys are ramping up prosecution of these cases.

In May 2018, the government passed a law that intends to reduce rates of synthetic identity fraud. The law requires the SSA to provide banks with an electronic system that can check whether an applicant’s name and date of birth matches their SSN within 24 hours. This system will make it easier and faster for banks to detect synthetic identities before they unwittingly provide credit to fraudsters.

Banks are also beginning to experiment with biometric technology that could help fight fraud, like using voice recognition security to detect if a certain voice has been associated with multiple identities.

With the increasing scrutiny on synthetic identity fraud and CPN fraud, buying or using a CPN for any reason is a dangerous game. If you were to obtain a CPN and use it instead of your SSN on documents, you would be creating a record of committing fraud that could be detected and traced back to you, especially as banks and the federal government start taking more severe action against fraud.

Avoiding a CPN Scam

When it comes to protecting yourself from CPN scams, your best bet is to stay far away from anyone trying to sell you a CPN, EIN, or anything that is supposed to somehow “wipe the slate clean” of your bad credit. Companies claiming that you can apply for a new line of credit in a way that is completely independent of your credit history are trying to mislead you.

Since lenders can look into your address, name, date of birth, and other information besides your SSN, they can easily tell that you have used a false SSN because they have other information they can use to verify your identity. For this reason, some CPN providers encourage their customers to change their names and addresses. If a company selling CPNs advises you to change your address, phone number, or anything else about your current identity, that is a huge red flag that they are committing fraud—and so are you.

Unfortunately, many scammers often prey on those who are most in need: those who are low-income and can’t afford another financial hit. Tricked by promises of clean scores and better credit, users are misled into buying a CPN.

The problems occur when CPNs are used to take out lines of credit. If the borrower fails to make payments, the lender may have little recourse since a fraudulent ID number was used for the borrower. At this point, an investigation may be opened, and investigators can follow the paper trail to the consumer.

Although there are stories of people getting away with using CPNs, keep in mind that sometimes investigations take place and charges are filed several years after the fraudulent activity occurred.

In 2015, a man from Louisiana was charged with felony racketeering, including theft, identity theft, and money laundering for defrauding hundreds of people and financial institutions with his credit repair company. He sold SSNs stolen from children as CPNs for hundreds of dollars each, claiming they would replace the SSNs of the unknowing victims of his scheme. He could face up to 75 years in prison if convicted.

In another current example that took place in 2018, Calvin Wayne Cade, Jr., of Oklahoma City, pleaded guilty to knowingly making a false statement to a financial institution by using CPNs to falsify his SSN in credit applications. The CPNs he used were stolen SSNs belonging to children born in 2006 and 2008. By using a fraudulent number on credit applications, Cade deceived banks, credit card companies, and retailers into thinking he had a better credit history than he really did.

With the lines of credit he received using these CPNs, he purchased vehicles, TVs, furniture, computers, and more, and then failed to make payments on the credit accounts, causing financial losses to the creditors. Cade was sentenced to 18 months in prison followed by three years of supervised release. He has also been ordered to pay $112,924.54 in restitution to the other creditors he defrauded.

Summarizing CPNs

A social security number is the most important and high-level personal identification number used in the United States. The government issues these numbers and they are not to be bought or sold on the open market. Misrepresenting your SSN is a federal crime, so by definition, using a CPN in place of your SSN is also a federal crime.

The proliferation and use of CPNs has become highly associated with a new form of fraud called synthetic identity fraud. Since this is relatively new the government is quickly catching up to illegal businesses who sell these CPNs which assist those who are looking to synthesize a new identity. Court cases as recent as 2018 are showing that people who engage in this type of fraud can receive heavy fines and prison time.

While there are many companies who advertise that CPNs are perfectly legal, the governing federal agencies have clearly stated this is not the case. The use of CPNs to obscure SSNs is illegal, period.

The government has prioritized synthetic identity fraud as a major concern of national security. In response, federal agencies including the Department of Homeland Security, the FBI, the Postal Inspection Service, the Secret Service, the Department of State, Social Security Administration, and the Federal Trade Commission are creating new task forces to investigate and prosecute fraudulent activity.

Why We Don’t Work With CPNs

Since using CPNs to apply for credit is a federal crime, we cannot assist consumers who are looking to use them. Our service is strictly for people using a valid SSN. We verify all of our clients’ SSNs through third-party databases before processing orders and we take all necessary measures to protect our credit partners, our clients, and creditors. Under no circumstances will we accept a CPN, and any orders attempting to bypass our filters will not be refunded.

If you’re looking for a quick solution to erase your debt or a poor credit score, there is no silver bullet. Not only will CPNs not solve your problems, but you could get in serious trouble with the government. Instead, work on building positive credit the right way using your SSN.

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Watch Out for These Tradeline Myths

July 12, 2019CreditBy toptierfinancial

The tradeline industry is full of rumors, myths, and inaccuracies. Since we aim to educate consumers on how tradelines work and how the credit system works, we want to dispell some of these common myths about tradelines.

The Equal Credit Opportunity Act prohibits credit discrimination and helps protect authorized users tradelines.

The Equal Credit Opportunity Act prohibits credit discrimination and helps protect authorized users tradelines.

1. Tradelines Are Illegal

Unfortunately, many people immediately discount the idea of using tradelines because they believe the pervasive myth that tradelines are illegal.

The reason this myth exists is that FICO stated in 2008 that the FICO 9 credit score would eliminate the benefits of authorized user tradelines for credit piggybackers by somehow distinguishing between “real” authorized users and those who just want to use AU tradelines to build their credit profile.

However, the Equal Credit Opportunity Act (ECOA) prevents this kind of credit discrimination, and FICO admitted to Congress that this action would illegally violate ECOA. Thus, FICO was forced to reverse its decision.

It seems that many people assumed that since the issue of tradelines went all the way to Congress, they must have been banned, but that is not the case. To the contrary, Congress actually protected the ability of consumers to use authorized user tradelines.

As further evidence that tradelines are legal, the banks themselves actually promote the practice of becoming an authorized user for the specific purpose of boosting your credit score.

2. Tradelines Don’t Work Anymore

This is another myth that arose out of the FICO controversy in 2008. Since FICO claimed that their new credit scoring model would be able to differentiate between traditional authorized users and those trying to “game the system,” many people assumed that this meant AU tradelines wouldn’t work anymore.

However, as we discussed above, FICO was not legally able to go through with this plan, which means anyone can still take advantage of the benefits of user tradelines.

ECOA protects authorized users from being discriminated against, so AU tradelines are here to stay.

Plus, even if FICO does manage to come out with a score designed to punish piggybackers in the future, it will likely take years or even decades for lenders to start using the new score.

If you are not convinced that tradelines still work, we recommend reading our article, “Do Tradelines Still Work in 2019?”

The Ethics of Tradelines3. Tradelines Are Unethical

Some people think that it is unethical to buy or sell tradelines because they believe that people who buy tradelines are artificially boosting their credit score and can therefore obtain credit that they are not really qualified for.

Firstly, is it unethical to try to boost one’s credit score using legally allowable methods?

People take actions to boost their credit scores every day, such as asking for credit limit increases, taking out new loans to establish more lines of credit, asking their banks to forgive late payments, paying down credit card balances multiple times a month to keep the utilization low, just to name a few.

Becoming an authorized user for the purpose of building credit is just one of many common methods that people use to try to improve their credit.

You have probably even tried several of these techniques yourself. Therefore, it seems that the majority of people do not believe that it is unethical to manipulate credit scores within the legal limits of the law.

In addition, studies have shown that about a third of people have authorized user accounts in their credit profiles and that those authorized user accounts tend to be superior tradelines to the primary accounts in their own name, which means about a third of people are already benefiting from credit piggybacking.

However, minorities have fewer authorized user accounts and benefited less from them compared to whites.

Creating a marketplace where affordable tradelines can be bought and sold helps to create more equal credit opportunity for those who have historically been disadvantaged by an unfair system.

Read “The Ethics of Tradelines” for an extended discussion on this topic.

4. Tradelines Are Expensive

One of the common complaints about tradelines is that they are expensive. Historically, tradelines were only available to the wealthy and privileged due to their high cost.

That may still be true for a lot of tradeline companies, but Tradeline Supply Company, LLC has been a leader in revolutionizing the tradeline industry and making tradelines affordable for everyone.

Our fully automated online platform allows us to keep costs down and provide fairly priced tradelines to consumers.

Our tradelines range in price from as low as $150 to around $1500. Our inventory of thousands of tradelines means virtually everyone can find tradelines that fit their needs as well as their budget.

We have also helped contribute to lower pricing in the industry as a whole. Other companies have started to follow our lead and lower their prices to stay competitive.

All of this means that tradelines are now more affordable than ever.

5. Primary Tradelines Are Better Than Authorized User Tradelines

People often assume that primary tradelines are superior to authorized user tradelines. They think that since authorized users are not held financially responsible for a credit account, primary tradelines must be more powerful, but this belief is somewhat misguided.

When it comes to building credit, the ultimate goal is to open your own primary accounts and maintain a positive history on those accounts, so in this sense, primary tradelines are the priority.

However, when it comes to buying tradelines, trying to buy a primary tradeline is generally not a good idea. Firstly, the primary tradeline industry is full of scams and questionable practices, some of which may even be illegal.

If you think about it, it doesn’t really make sense to try to “buy” a credit account that, by definition, is supposed to have been issued to you by the creditor. If the account was not issued to you, that means someone else had to have opened that account in their name at some point, so how does it then become your primary tradeline?

Secondly, purchasing a primary tradeline may not even help achieve your goals as much as you might think. A legitimate primary tradeline will have no age and no payment history associated with it and will probably have a low limit as well.

In contrast, you can legitimately purchase authorized user tradelines that have lots of age and perfect payment history in addition to high credit limits.

Which option do you think would be better for your credit: the brand-new account with a low limit, or a seasoned AU tradeline with a high limit? In general, the seasoned authorized user tradeline is going to be the better choice.

6. Tradelines Are an Alternative to Credit Repair

Tradelines vs. Credit RepairWhile tradelines and credit repair are often used together, they are not the same thing, and it’s important to understand the difference.

An easy way to think about the distinction between tradelines and credit repair is that tradelines add positive information to your credit report, while credit repair removes inaccurate information from your credit report.

If your credit report has damaging errors on it that are lowering your score, any tradelines you add will be limited in their power. For this reason, you may want to undergo credit repair before or in tandem with tradelines.

Similarly, tradelines should not be used as a substitute for credit repair. While they can help to balance out derogatory accounts, this is not the same thing as cleaning up errors in your credit report.

The best results for your credit can be obtained by using both credit repair and tradelines together.

7. Authorized User Tradelines Do Not Count for Mortgages or Auto Loans
For the majority of the most common mortgages, there is no minimum tradeline requirement.

For the majority of the most common mortgages, there is no minimum tradeline requirement.

We do not advertise our tradelines saying if you buy our tradelines you can then qualify for a mortgage or auto loan. However, we have done some research and we have found that for the majority of the most common mortgages (most conventional, FHA, and VA loans) there is no minimum tradeline requirement in order to qualify for those loans.

In other words, someone can have zero tradelines and could still potentially be qualified to buy a house. The main factors will typically be the debt-to-income ratio, loan-to-value ratio, and credit score.

Fannie Mae typically updates their underwriting guidelines in regards to authorized user tradelines on their website.

We have heard there are similar guidelines for auto loans as well. Again, we are not claiming that buying tradelines can help someone buy houses or cars, but we are simply addressing this common myth.

8. I Can’t Get Tradelines That Were Opened Before My 18th Birthday

Some people believe that you cannot or should not buy tradelines that were opened before you turned 18 years old. The theory seems to be that it would look suspicious if you were to have an authorized user tradeline while under the age of 18, so somehow the tradeline wouldn’t count toward your credit history.

Contrary to this myth, you do not have to buy tradelines that were opened after your 18th birthday.

Contrary to this myth, you do not have to buy tradelines that were opened after your 18th birthday.

In reality, there are many examples to show that this is not true. Parents often add their children as authorized users of their credit cards well before age 18, whether they allow their children to actually use the credit cards or they just want to help their children build a credit history from a young age.

Imagine this hypothetical example: let’s say you are 16 years old. Your father has a credit card that has been open for 20 years. He wants you to be able to use the credit card in case of emergencies, so he adds you as an authorized user to his 20-year-old account. In this case, the tradeline actually extends back to before you were born, but that does not prohibit you from being an authorized user on the account.

Of course, there may be exceptions to this rule, since different banks may have different policies as to the minimum age of authorized users.

However, if you are over the age of 18 and buying tradelines, it should not matter how old the tradeline is.

9. Tradelines Are Only a Temporary Solution
Although tradelines usually only report as open for two months, they remain on your credit report as part of your permanent credit history.

Although tradelines usually only report as open for two months, they remain on your credit report as part of your permanent credit history.

While it is true that a tradeline will typically only report as an open account on your credit report for two reporting cycles, this does not mean that tradelines are only a temporary solution.

Once you are removed from the tradeline, the account will then show as closed, and the closed account will remain on your credit report as part of your permanent credit history for as long as the bank continues to report it.

Although closed accounts are assumed to weigh less on your credit score than open accounts, since the closed tradeline is still a part of your credit history, it will likely still factor into your credit score.

10. The Credit Limit Is More Important Than Age

Between the two most important factors to consider when choosing a tradeline, age and credit limit, we usually recommend prioritizing getting as much age as possible, because age is the most powerful factor of a tradeline. Of course, this depends on what your goals are, but in most cases, age is more valuable than the credit limit.

This is because age goes hand-in-hand with payment history, together making up 50% of a credit score. When it comes to the length of your credit history, more is always better.

11. Buying a Tradeline Guarantees a Score Increase

Those looking to improve their credit score sometimes mistakenly assume that they can go out and buy any tradeline and get a guaranteed credit score boost. This is a dangerous myth because if buyers are not educated and choose the wrong tradeline for their specific credit situation, buying a tradeline could actually backfire and hurt their credit.

To make sure you don’t fall into this trap, we recommend reading “How to Choose a Tradeline,” “Common Mistakes Made When Buying Tradelines,” and “The #1 Secret on How to Unlock the Power of Tradelines.”

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What’s the “Right” Number of Credit Cards?

July 11, 2019CreditBy toptierfinancial

How many times have you read a blog or heard some financial “guru” opining as to the mystical “right” number of credit cards to have in your wallet? Is the right number one, or two, or three? And what is the criteria for considering what is the right number versus the wrong number?

I’ll let you in on a little secret, there is no right or wrong number. It’s just an excuse to write a blog. If you are comfortable with one credit card, then one is the right number for you. If you need four to operate efficiently, then four is your right number. If you hate credit cards, then maybe zero is your right number.

When considering the right or wrong number of credit cards, nobody ever seems to focus on credit scores as part of their consideration. Well, that’s exactly what I’m going to do. And the reason I’m going to do so is because from a credit scoring perspective there actually is a right number of credit cards.

The Revolving Utilization Ratio

There is a metric in credit scoring systems called revolving utilization. Revolving utilization, often referred to as the balance-to-limit ratio, is the relationship between your credit card balances and your credit card limits, expressed as a percentage.

The ratio is calculated by dividing the aggregate of your balances by the aggregate of your credit limits, thus yielding a percentage. The higher that percentage, the fewer credit score points you’re going to earn from that metric. The lower that percentage, the more points you’re going to earn.

Reports about the optimal percentage are all over the place, with many of them being wrong. For FICO the optimal percentage is actually 1%, which is next to impossible to pull off. So, we have to go to the average percentage for the people with the highest average FICO scores, those with 750 and above. For those folks the average utilization ratio is 7%. For VantageScore the optimal percentage is anything less than 30%.

Now, that doesn’t mean you have to have 7% or 30% in order to have solid credit scores. You’ll just need to hit those targets if you want the highest possible scores, something that’s infinitely important right before you apply for a loan.

What Is the "Right" Number of Credit Cards? Pinterest graphic

Let’s go back to the topic of this blog, which is the right number of credit cards. The right number for you is going to be the number of cards necessary for you to maintain 7% utilization relative to your normal credit card spending patterns. That way you don’t really have to worry about your credit scores, ever. If you can hit 7%, or close to it, on a monthly basis then you’ll do as well as possible under both credit scoring platforms.

What you need to do now is download your credit card statements from the last 12 months. Add up the balances from all of the statements, and divide that number by 12. That will give you your average monthly amount of credit card debt appearing on your credit reports. Let’s say, for illustration purposes, your average monthly balance from all of your cards is $5,000.

Now we just need to figure out what credit limits you need from all of your cards in order for $5,000 to represent 7% of the aggregate credit limit. I’ll do the math for you…you’re going to need about $70,000 of credit limits for $5,000 to represent 7% of the limit because $5,000 divided by $70,000 equals 7.1%.

$70,000 sounds like a really large number, but in the world of credit card credit limits, it’s actually not that big of a number.  In fact, if you have two credit cards each with limits of $35,000, you’re already there. For many of you, however, you’re going to need more than two cards.

This becomes the answer to your question about the right number of cards. If it takes six credit cards for your average monthly credit card balances to equal about 7%, then six cards is the right number for you. If it takes ten cards, or 13 cards, or three cards…then those are the right numbers for you.

John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group and the author of four books about consumer credit. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has 27+ years of experience in the consumer credit industry, has served as a credit expert witness in more than 370 lawsuits, and has been qualified to testify in both Federal and State courts on the topic of consumer credit. John serves as a guest lecturer at The University of Georgia and Emory University’s School of Law.

Disclaimer: The views and opinions expressed in this article are those of the author John Ulzheimer and do not necessarily reflect the official policy or position of Tradeline Supply Company, LLC.

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What Is the Difference Between Individual and Overall Utilization?

June 27, 2019CreditBy toptierfinancial

What is the difference between your overall credit utilization ratio and individual utilization ratios and why does it matter to your credit? Keep reading to find out.

Credit utilization makes up 30% of a FICO score.

Credit utilization makes up 30% of a FICO score.

What Is Credit Utilization?

To put it simply, credit utilization is the amount of debt you owe compared to the amount of your available credit. In other words, it is the amount of your available credit that you are actually using.

In terms of your credit score, credit utilization makes up 30% of your score, second only to payment history.

The reason credit utilization is such an important part of your credit score is that the ratio of debt someone has is highly indicative of whether they will default on a debt in the future. The more you owe, the harder it becomes to pay off all that debt on time every month, which makes you a riskier bet for lenders.

Components of Credit Utilization

According to FICO, there are several components that fall within the category of credit utilization, such as:

The total amount you owe on all accounts (overall utilization)

The amount you owe on different types of accounts

The utilization ratios of each of your revolving credit accounts (individual utilization)

The number or ratio of your accounts that have high balances

The amount of debt you still owe on your installment loans (e.g. mortgages, auto loans, student loans)

What Is the Difference Between Overall and Individual Utilization?

Your overall utilization ratio is the amount of revolving debt you have divided by your total available revolving credit.

For example, if you have one credit card with a $450 balance and a $500 limit and a second credit card with a $550 balance and a $3,500 limit, your overall utilization ratio would be 25% ($1,000 owed divided by $4,000 available credit).

However, the individual utilization ratios of your respective credit cards are 90% ($450 balance / $500 credit limit) and 16% ($550 balance / $3,500 credit limit).

Since credit scores consider individual utilization ratios, not just overall utilization, having any single revolving account at 90% utilization is going to weigh negatively on the credit utilization portion of your score.

Overall Utilization May Not Be as Important as You Think

Typically, when people think of the effect that credit utilization has on credit scores, they often assume that overall utilization is the most important variable.

By this assumption, it would be fine to have individual accounts that are maxed out as long as the overall utilization is still low.

Individual utilization ratios may be more important than the overall utilization ratio.

Individual utilization ratios may be more important than the overall utilization ratio.

However, we have seen that this is not always true.

For example, sometimes clients with maxed-out credit cards will buy high-limit tradelines in order to reduce their overall utilization ratio, but then they don’t see the results they were hoping for.

This means that the individual accounts with high utilization are still weighing heavily on the clients’ credit scores, despite the fact that they have improved their overall utilization. In other words, the decrease in the overall utilization ratio did not make much of a difference.

Cases like this seem to indicate that overall utilization may not play as big a role as traditional wisdom has led us to believe and that the individual utilization ratios may be more important.

This is one of the reasons why we typically suggest that consumers focus on the age of a tradeline rather than the credit limit. Although people tend to gravitate toward high-limit tradelines, the age of a tradeline is actually more powerful in most cases, especially considering that lowering one’s overall utilization ratio may not help very much.

How Do Tradelines Affect Credit Utilization?

Although the age of a tradeline is often its most valuable asset, tradelines can still help with some of the credit utilization variables. 

Since our tradelines are guaranteed to have utilization ratios that are at or below 15%, this means that at least 85% of that tradeline’s credit limit is going toward your available credit, which helps to lower your overall utilization ratio. 

Buying tradelines also allows you to add accounts with low individual utilization to your credit file, which can help to improve the number of accounts that are low-utilization vs. high-utilization.

Tips to Keep Your Credit Utilization Low

Spead out your charges between different cards

Since we have seen that it’s important to keep individual utilization ratios low, one strategy to accomplish this is to make charges on a few different credit cards instead of charging everything to one card. Spreading out your charges prevents an excessively high balance from accumulating on any one individual card.

If you spend a lot on one of your cards, consider spreading out your charges between different cards or paying down the balance more often.

If you spend a lot on one of your cards, consider spreading out your charges between different cards or paying down the balance more often.

Pay off your balances more frequently

If you do spend a lot on one card, it helps to pay off your balance more than once a month. If your card reports to the credit bureaus before you have paid off your balance, it will show a higher utilization than if you had paid some or all of the balance down already.

You can either time your payment to post just before the reporting date of your card or you can make payments several times per month. Some people even prefer to pay off each charge immediately so their card never shows a significant balance.

Set up balance alerts to monitor your spending

To prevent mindless spending from getting out of control, try setting up balance alerts on your credit card. Your bank will automatically notify you when the balance exceeds an amount of your choosing, so you can back off of spending on that card or pay down your balance.

Don’t close old accounts

Even if you don’t use some of your old credit cards anymore, it’s often a good idea to keep the accounts open so they can continue to play a positive role in your overall utilization ratio and the number of accounts that have low utilization vs. high utilization.

Ask for credit limit increases

Another way to decrease your utilization ratios is to call your credit card issuers and ask them to increase your credit limit.  By increasing your amount of available credit, you decrease your utilization ratio, both on individual cards and overall.

Individual vs. Overall Utilization - Pinterest

Keep in mind that your bank may do a hard pull on your credit to decide whether or not to grant your request, which could ding your score a few points temporarily. However, the small negative impact of the inquiry could be offset by the benefit of the credit line increase.

Also, this might not be an ideal strategy if you think you will be tempted to use the new credit available to you.

Open a new credit card

Like asking for a higher credit limit, opening a new credit card can also lower your credit utilization, provided you leave most of the credit available.

Again, this will add an inquiry to your credit report, as well as decrease your average age of accounts, so this could have a negative impact on your score temporarily, which may be outweighed by the decrease in your credit utilization.

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Business Credit Starts With Personal Tradelines

June 21, 2019CreditBy toptierfinancial

Many people dream of starting their own business one day, but not everyone can fund their business ventures with their own savings. Most entrepreneurs will probably want to apply for business credit at some point.

If you are interested in building business credit, our article breaks the difference between business credit and personal credit, what business tradelines are, and how to build business credit.

Business Credit Pinterest graphic

What Is Business Credit?

Building business credit is similar to building personal credit, but it’s actually a completely separate system. Just as individuals have personal credit scores that are meant to represent their creditworthiness, businesses have business credit scores to represent the company’s creditworthiness.

Why Do You Need Good Business Credit?

Good business credit shows that your business has been reliable in paying creditors, which indicates that it is a good candidate to loan money to or do business with.

Establishing business credit is essential if you ever want to be able to make purchases from vendors on credit or open a business line of credit to help support your company. Virtually all business will likely want the option of using credit at some point.

What Is a Business Credit Score?

Business credit scores, however, are determined by the major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. Each bureau has a different way of collecting information and determining your business credit score. FICO also offers a credit scoring service for small businesses.

Dun & Bradstreet generates a Paydex score, which rates the creditworthiness of businesses on a scale from 1 to 100, 100 being the best score. The D&B Paydex score is entirely based on payment history. Similar to a personal credit score, it helps creditors decide whether to loan money to a business and what the terms of the loan should be.

Interestingly, an on-time payment history does not earn a perfect Paydex score. To get a business credit rating of 100, a business must consistently pay creditors 30 days in advance of the due date. Merely paying on time will only result in a credit score of 80.
In addition, the Paydex business credit score is weighted by dollar amount, so larger accounts could impact your score more than smaller accounts.

Equifax has three different credit scores for businesses.
Business credit reports can include information beyond just credit accounts, such as legal filings and public records.

Business credit reports may include information beyond just credit accounts, such as legal filings and public records.

The business payment index is similar to the Paydex score. It ranges from zero to 100 based on whether payments were made on time.
The business credit risk score is intended to predict the likelihood that a business will become seriously delinquent on payments. Scores can range from 101 to 992.
The business failure score aims to predict the probability of a business closing within 12 months. The score ranges from 1,000 to 1,610 with a lower score indicating that the business seems more likely to fail within 12 months. With both the business credit risk score and the business failure score, a score of 0 corresponds to bankruptcy.

Experian provides a business CreditScore report that includes a credit score for businesses in addition to other relevant information such as public records and account histories. The Intelliscore, Experian’s business credit score, ranges from 0 to 100, but it is different from the D&B Paydex score because it takes into account other factors besides just payment history.
FICO’s Small Business Scoring ServiceSM ranges from 0 to 300 and is used by the Small Business Association in evaluating credit decisions. FICO’s small business credit score may actually include information from the principal borrower’s personal credit report, so your personal credit could have an impact on your small business credit score.

Business credit reports aren’t free, so if you want a business credit check, you will have to pay the bureau providing the business credit report.

How to Build Business Credit

To build up a Paydex credit score, a business needs to obtain a DUNS number from Dun & Bradstreet and establish a payment record with at least four vendors, according to NerdWallet. Since the Paydex score is solely based on how quickly businesses pay their debts, you’ll want to pay your suppliers ahead of schedule to build your Paydex business credit score.

Building business credit is much like building personal credit, although business credit has a different reporting system.

Building business credit is much like building personal credit, although business credit has a different reporting system.

In establishing business credit, as with personal credit, the most important factor is maintaining a good credit history. However, business credit reports can often take into account additional information, such as legal filings, public records, and the age and size of your company.

Things that can hurt your business credit score include:

Slow or late repayment of debt
Missed payments
Judgments, collections, or liens on your business
Outstanding balances/high credit utilization
Not enough years of being in business

Just like personal credit reports, business credit reports can and often do contain errors. it is important to regularly check your business credit report for errors that could be damaging your score.

What Are Business Tradelines?
To get business funding, you will typically need to have solid revenue and strong personal credit, not just business tradelines.

To get business funding, you will typically need to have solid revenue and strong personal credit, not just business tradelines.

Business tradelines are all of the credit accounts belonging to your business. Examples of business credit tradelines include business lines of credit, business loans, business credit cards, and credit accounts with individual suppliers.

Those hoping to get business credit to start or expand their own businesses may seek out business tradelines for sale to help them build their business credit rating. However, similar to buying primary tradelines, trying to buy tradelines for business credit might not be a good idea for several reasons.

Firstly, business tradelines don’t always report to the credit bureaus. Many business tradelines are not necessarily loans or credit cards, but accounts with individual vendors that allow you a certain period of time to pay your bills. Not all vendors report payment activity, so many times businesses are required to pay Dun & Bradstreet a monthly fee to verify their credit history.

In addition, getting business credit usually depends more on having strong personal credit and a healthy business revenue than having a certain number of business tradelines on file.

How to Get Business Credit

While Tradeline Supply Company, LLC does not assist with tradelines for business credit or business funding, we can share some general information on the subject.

Generally, one of the most important factors in getting business credit is to be a personal guarantor, especially for a newer business that does not have much credit history. As a personal guarantor, it is essential to have excellent personal credit.

Business lenders will likely check your personal credit even if you are not serving as a guarantor.

Business lenders will likely check your personal credit even if you are not serving as a guarantor.

Even if you are not a personal guarantor, often lenders will still check your personal credit when you are applying for business funding. So while business credit may be the long-term goal, the way to achieve this goal is to first build and maintain your own outstanding credit report.

Therefore, one of the best steps you can take toward establishing business credit is building up your own credit history with high-quality tradelines so you can serve as a personal guarantor for your business. Seasoned authorized user tradelines are a great way to quickly add years of perfect payment history to your credit file. See our updated list of available tradelines now.

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Tradelines in 5 Easy Steps

June 16, 2019CreditBy toptierfinancial

While the credit system is definitely complicated, buying tradelines doesn’t have to be. Just keep a few basic principles in mind and follow these five steps to make buying tradelines easy!

Here are the five easy steps that we’ll break down in this article:

Understand your credit profile
Determine your goals
Choose tradelines that fit your credit profile and align with your goals
Order your tradelines
Wait for your tradelines to post!

Tradelines in 5 Easy Steps Pinterest

1. Understand your credit profile

Understanding your credit file is the foundation of improving your credit. If you don’t know what’s in your file and blindly move ahead with tradelines and/or credit repair, you could easily make a mistake that could hurt your credit more than it helps.

Your credit report shows a list of all of your tradelines, and how you manage these tradelines is reflected in your credit score.

We’ve written about everything you need to know about credit scores previously, but to summarize, these are the main factors that affect your credit score:

Payment history: 35%
Utilization (how much you owe): 30%
Length of credit history: 15%
Credit mix: 10%
New credit: 10%

Before buying any tradelines, you’ll want to take a good look at your credit profile on CreditKarma.com (or order one of your three free credit reports allowed each year from annualcreditreport.com) and make sure everything is accurate and up to date.

Free credit report and credit score from CreditKarma

You can get an overview of your credit profile for free on CreditKarma.com.

If there is inaccurate information in your credit profile, you may want to look into credit repair in addition to tradelines.

Examine each of your credit accounts and try to understand how it may be affecting your credit score, whether positively or negatively.

This foundational step will allow you to form a clear picture of your unique credit situation so you can choose the smartest path to move forward.

2. Determine your goals
The five factors that affect your credit score by Tradeline Supply Company, LLC

Consider these five main factors that affect your credit score when setting your goals.

Now that you are aware of what is in your credit profile, ask yourself what variables could be improved and which strategies would be a good investment of your time, effort, and money.

For example, if you have a blemished payment history that is bringing down your score, you could balance that out by adding as much positive payment history as possible with a seasoned tradeline.

If your credit age is not old enough, you may want to increase the age of your oldest account and your average age of accounts by adding a tradeline with a lot of age.

Perhaps you have a thin file or your credit mix is unbalanced, and you just want to add more tradelines to your credit file.

These are just a few examples of common goals that people often have when they are looking to add tradelines to their credit report. Make sure your goals are personalized to your unique credit situation.

3. Choose tradelines that fit your credit profile and align with your goals

Choosing the correct tradeline tends to be the trickiest part of this process. However, there are really only two main variables that you need to consider when selecting tradelines: the age of the card and the credit limit.

The tricky part is that people often incorrectly assume that they should just get the highest credit limit. In reality, this approach could actually backfire and hurt your credit, because the age of the tradeline is much more important in the vast majority of cases.

However, the credit limit does still come into play if utilization is a factor you are concerned about.

To account for both credit age and utilization, you’ll want to calculate your own average age of accounts and overall utilization ratio using our custom Tradeline Calculator. Simply input the numbers from your credit profile and the calculator will do the work for you.

Use our Tradeline Calculator to calculate your average age of accounts and utilization ratio.

Use our Tradeline Calculator to calculate your average age of accounts and utilization ratio.

Then, try plugging in information from some of the tradelines you are interested in purchasing and see how the numbers change. To get the maximum benefit from tradelines, you want to see the average age of accounts jump up at least to the next age level.

Based on our research, we estimate that the age levels to shoot for are 2 years, 5 years, 8 years, 10 years, and 20 years. So if your average age of accounts is 3 years, for example, it is probably a good idea to buy a tradeline that will boost that average to at least 5 years.

It’s important to fully think through your decision instead of just buying a tradeline that “seems” like a good choice.

For more guidance on choosing the best tradelines for your goals, we strongly encourage you to read “How to Choose a Tradeline” and “Common Mistakes Made When Buying Tradelines.”

4. Order your tradelines
Add tradelines to your cart and checkout on our secure site.

Add tradelines to your cart and checkout on our secure site.

Once you have identified the best tradelines for you, simply add them to your cart and check out on our secure website!

To ensure that all goes smoothly with your purchase and that your tradelines post as guaranteed, you need to make sure you do not have any credit freezes or fraud alerts with any of the credit bureaus.

These actions block access to your credit report, so no new tradelines can be added. If you do have a credit freeze or fraud alert, contact each credit bureau to remove it before purchasing tradelines.

For detailed instructions on how to place a tradeline order, see “How to Purchase Tradelines and What to Expect.”

5. Wait for your tradelines to post!

The last step is the easiest of all: sit back and wait for your tradelines to post! Once you receive your confirmation email, simply wait until the last day of each tradeline’s reporting period and then check to verify that the tradelines have posted.

Then, celebrate your new tradelines on social media! Don’t forget to tag us @tradelinesupply and use #tradelinesupply so we can find your post!

My Tradelines Just Posted! Share this image on social media and tag us when your tradelines post!

Share this image on social media and tag us when your tradelines post!

The banks and credit bureaus sometimes have errors in their reporting, so, unfortunately, there is a small chance that a non-posting could occur. However, if a tradeline does not post to at least any two out of the three credit bureaus, we will provide a refund or exchange for that tradeline. Simply follow the instructions detailed in “Report a Non-Posting” to submit your refund request.

6. Extra credit: Become a tradeline expert using the resources in our Knowledge Center!

The more you learn about tradelines, the more informed you will be when it’s time to buy. Those who are educated on the credit system and how tradelines work are in the best position to maximize their results from tradelines.

Check out our extensive library of tradeline resources in our Knowledge Center to become a tradeline expert and a highly informed buyer.

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Tradelines: What You Should Know About Building Credit

May 26, 2019CreditBy toptierfinancial

We all know that credit history is important because it’s how lenders, landlords, and sometimes even employers assess our creditworthiness. Anytime you apply for a loan or credit card, the lender will use your credit file to determine whether they think you are eligible for credit and what your interest rate will be.

But did you know that all credit is built from tradelines? Although this fact is not often discussed, it’s just as important to understand when it comes to building credit. Keep reading to find out why all credit begins with tradelines.

Building good credit may seem complicated, but it all boils down to properly managing your tradelines.

Although building good credit may seem complicated, it all boils down to properly managing your tradelines.

What Is a Tradeline?

A tradeline is any account that appears on your credit report. This includes both revolving accounts and installment loans.

Revolving accounts are accounts that can be used repeatedly without paying them off in full every month, so they may fluctuate in balance and minimum payment. Examples of revolving accounts include credit cards and home equity lines of credit. An installment loan is a loan that is repaid over time with a set number of scheduled payments, e.g. a mortgage, auto loan, or student loan.

All of these different types of accounts are tradelines. Essentially, whether you have good or bad credit depends entirely on how you manage your tradelines.

Check out “What Is a Tradeline?” and our Tradelines 101 infographic for more tradeline basics.

What Goes Into Your Credit Report?

Although each credit reporting bureau keeps the specifics of their credit scoring models a closely guarded secret, the general categories that factor into credit scores are widely known. In general, here’s what goes into a credit report, which is then used to calculate your credit score:

Credit scores are comprised of five main factors.

Credit scores are comprised of five main factors. (Click this image to pin to your Pinterest board!)

Payment history, approximately 35%: Paying the amount due on your tradelines on time every month is extremely important. Late or missed payments could result in derogatory marks that bring down your score. It’s a good idea to have several different tradelines that are in good standing since this category is weighted so heavily. If you do have a derogatory tradeline, it is important to maintain a perfect payment history on the rest of your tradelines to balance out the negative mark on your report. You always want your good history to outweigh the bad.
Utilization, or how much you owe, approximately 30%: Your utilization ratio is the ratio of how much you owe on all your revolving accounts (e.g. credit cards) to your total available credit, expressed as a percentage. Credit bureaus may consider both your overall utilization ratio and the utilization ratio of each individual tradeline. The lower your utilization, the better—it is generally recommended to keep your utilization below 30% but having it lower than this is even better. Therefore, tradelines with high utilization can hurt your score, while tradelines with low utilization can help your score.
Length of credit history, approximately 15%: This category considers factors like the average age of your tradelines, the oldest tradeline in your credit file, and the ratio of “seasoned” to non-seasoned tradelines. A seasoned tradeline is generally considered to be one that is at least two years old, at which point it is believed that the tradeline begins to have a more positive impact on your credit file. The older your tradelines are, the better impact they will have on your credit report. Since length of credit history goes hand-in-hand with payment history, together making up 50% of your credit score, generally, age is the most powerful factor of a tradeline.
Credit mix, approximately 10%: Creditors want to make sure that you can manage different types of credit, so they look for a balanced mix of different tradelines in your report. The most important thing is to have tradelines in both of the two major categories: revolving credit and installment loans.
New credit, approximately 10%: Credit scoring models take into account any new inquiries and new tradelines that you have added in the past 6 to 12 months. Generally, opening a new primary tradeline can have a temporary negative effect on your score, since it has no age and the person has not demonstrated their payment behavior on that account for very long.

Every major factor that goes into your credit file directly depends on your tradelines. Therefore, by adding authorized user tradelines, you can potentially affect each of these five factors.

Mismanaging your tradelines can lead to bad credit. Photo via CafeCredit.com.

Mismanaging your tradelines can lead to bad credit. Photo via CafeCredit.com.

There are a few things that could show up in your credit file that are not technically tradelines, such as collections, judgments, bankruptcies, and foreclosures. However, these bad credit items can all be thought of as the result of not properly managing your tradelines. Let’s examine each example.

A collection occurs when you have not been making payments on a tradeline and the creditor sells your debt to a collection agency.
A judgment against you happens when you default on a tradeline and a judge orders you to pay back the debt.
You might declare bankruptcy if you cannot pay off your tradelines and need to be released from the legal requirement to pay them.
Foreclosure is when a mortgage lender takes possession of the mortgaged property when the borrower fails to make payments on the mortgage tradeline.

How to Build Credit

The best way to build a good credit record is to open a variety of tradelines and keep them in good standing by making payments on time and keeping the utilization low. The fact is that you simply cannot build credit without tradelines.

Opening a credit card is a common way to establish a credit file and start building credit, but it is not the only option. Other paths to building credit include taking out student loans, auto loans, or secured loans. Unfortunately, building credit is often considered as a catch-22 because lenders are hesitant to provide credit to those with no credit history, so it can seem like it takes credit to get credit.

To overcome this obstacle, many people rely on the positive credit history of others to establish their own credit file.

Parents sometimes add their children as authorized users to their tradelines to help them build credit early.

Parents sometimes add their children as authorized users to their credit cards to help them establish credit early.

The Consumer Financial Protection Bureau estimates that about 25% of consumers first acquire credit history via an account on which someone else was also responsible. Some of these consumers open a joint account with a co-borrower, while others become authorized users on someone else’s primary tradeline.

As an example of this, parents are commonly advised to add their children as authorized users to their credit cards in order to help them establish a positive credit history early in life. In fact, it is estimated that about 20-30% of Americans have at least one authorized user tradeline in their credit file.

Unfortunately, many people do not have the same opportunity to benefit from a family member’s authorized user tradelines. Studies have shown that minorities and lower-income demographics are less likely to have authorized user tradelines, which means they are likely to face difficulty in establishing a credit history.

We are proud to help reduce financial inequality by providing equal opportunities to those who may not have a friend or family member who can provide the benefits of an authorized user tradeline.

Tradelines and Your Credit

It is crucial to be knowledgeable about credit since credit is such an integral part of your financial well-being. Since all credit is essentially built on tradelines, it is equally important to understand the way tradelines may affect your credit.

Sometimes gaining access to tradelines can be a challenge for people who are either new to credit or who have had problems in the past and are trying to re-establish their credit. Traditionally, some people have had the privilege of relying on family and friends to help share credit, but new innovations have created equal opportunities for those who may not have the same opportunity. We are proud to provide quality tradelines for sale at affordable prices at TradelineSupply.com.

Were you surprised to learn that all credit is built from tradelines? Let us know by leaving a comment!

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The Future of Credit Repair and Tradelines

May 16, 2019CreditBy toptierfinancial

Big changes are happening in the world of credit repair and tradelines.

The tradeline industry is expanding rapidly. Gone are the days of only the wealthy having access to the strategy of credit piggybacking.

Innovations by tradeline companies have made tradelines more accessible than ever, helping to promote equal credit opportunity.

The top credit repair companies are getting on board with authorized user tradelines as a way to take their clients—and their businesses—to the next level of success.

Keep reading to find out why the future of credit repair depends on tradelines.

Tradelines & Credit Repair Go Hand-in-Hand
Credit repair and tradelines work best together. Click to go to the full version of our infographic.

Credit repair and tradelines work best together. Click to go to the full version of our infographic.

As we discussed in “Credit Repair vs. Tradelines,” when it comes to establishing or re-establishing credit, credit repair can only go so far.

It can remove inaccurate information, but then what is the client left with? They may end up with a thin file or they may have accurate negative information that cannot be removed.

The client still needs to show that they have a credit history. Removing too much information from their credit file could backfire and hurt their credit more than it helps.

The client not only needs credit repair but also credit restoration and reestablishment.

Credit repair is only half of the equation. The other half of the equation is tradelines, which can add positive credit history to a client’s credit file to reestablish their credit.

Unfortunately, the credit repair industry has not yet fully come around to the idea of using tradelines as an integral part of their business model.

This is changing rapidly, however, as credit repair businesses are realizing why authorized user tradelines are so valuable and how easy they are to add to their credit repair services.

How Credit Repair Companies Can Benefit from Tradelines

Although many credit repair businesses have historically been resistant to using tradelines, they would do well to reevaluate this stance. Tradelines can allow credit repair businesses to expand their offerings and grow at a much faster pace.

Here are some of the benefits credit repair companies can reap from integrating tradelines into their business:

Tradelines can enhance clients’ results and increase customer satisfaction.
Tradelines provide an opportunity to upsell and add value to your services.
It is easy to integrate tradelines into a credit repair business model.
Selling tradelines can increase your monthly revenue by thousands of dollars.

Why Don’t More Credit Repair Companies Offer Tradelines?
The legitimacy of tradelines has been confirmed by the U.S. Congress.

The legitimacy of tradelines has been confirmed by the U.S. Congress.

One common concern we hear from credit repair companies is the question of whether tradelines are legal. While we understand why this is such a common question, we want to clear up the misconceptions people have about the legality of tradelines.

Tradeline Supply Company, LLC does not give legal advice, but we can look to the government organizations that have provided guidance on this issue.

In 2008, the issue of piggybacking using AU tradelines was discussed in Congress after FICO tried unsuccessfully to eliminate the ability for AU tradelines to be factored into FICO scores.

Because of the Equal Credit Opportunity Act of 1974, which prohibits credit discrimination, FICO was forced to admit that they could not exclude certain AUs from their credit scoring models. The fact that this congressional hearing protected the status of AU tradelines supports the idea that tradelines are legal.

Understandably, however, the tradeline industry has earned a reputation for not being the most trustworthy business. Unfortunately, there are illegal and unethical tactics that take place within the tradeline industry that consumers should watch out for.

Tradeline Supply Company, LLC is changing the tradeline industry for the better by fighting unethical and illegal practices.

Tradeline Supply Company, LLC is changing the tradeline industry for the better by fighting unethical and illegal practices.

There are plenty of companies out there that sell tradelines while also participating in questionable and potentially fraudulent activities, such as address merging, selling primary tradelines, and using CPNs.

It’s important to work with a tradeline company that operates ethically and is fully compliant with laws and regulations. With our high standard of integrity, Tradeline Supply Company, LLC stands out from the tradeline companies that engage in unethical practices, and we aim to change the entire tradeline industry for the better.

Conclusions on the Future of Tradelines and Credit Repair

Tradeline companies who operate with ethics and integrity are breaking down the stigma of tradelines and showing how they help to create equal credit opportunity.

As a result, authorized user tradelines are no longer an underground strategy accessible only by the privileged few. Anyone can now use tradelines to build credit. The consumers who stand to benefit most from tradelines include those seeking credit repair.

While credit repair helps to remove damaging inaccuracies from consumers’ credit reports, removing negative information is often not enough to get people to where they want to be. Tradelines represent an opportunity to add positive credit history, helping to restore and rebuild consumers’ credit.

The Future of Credit Repair and Tradelines

Despite this fact, some credit repair companies still do not offer tradelines to their customers because they feel that tradelines are a threat to their business. They see tradeline companies as competition because clients may end up spending money on tradelines as opposed to their credit repair services.

However, this outdated view of the tradeline industry is preventing credit repair professionals from better serving their customers and ultimately stunting the growth of their businesses.

Credit repair companies who are adapting, innovating, and poised to thrive in changing times understand that they can no longer ignore the value of tradelines.

Tradelines allow credit repair businesses to offer more services, get better results for their clients, and multiply their profits. Simply put, credit repair companies cannot afford to miss out on tradelines if they want to keep up with the times.

Credit repair works best when paired with tradelines. In the future of credit repair and tradelines, the best credit repair companies will thrive by using tradelines to complement their credit repair services and maximize results for their clients.

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How to Choose a Tradeline: A Buyer’s Guide

May 14, 2019CreditBy toptierfinancial

*Click here to check your utilization ratios and average age of accounts with our custom calculator!*
Understanding How to Choose the Best Tradelines

If you’re just starting out in the world of tradelines, we recommend taking a look at our Tradelines 101 infographic to get the basics down before moving on to deciding which tradelines to purchase. If you’re already familiar with the concept of tradelines and want to learn how to select the best tradelines for sale, then this buyer’s guide is for you.

When shopping to buy tradelines, there are basically only two main variables to consider:

(1) the age of the card, and

(2) the credit limit.

All the other variables should be about equal, which includes having a perfect payment history, low utilization (at or below 15%), the type of account (usually a revolving credit card), and the reporting date.

In most cases, if you buy from a reliable tradeline supplier, the name of the bank should not matter, except in instances where you may be blacklisted from that bank due to filing for bankruptcy or having unpaid collections with that bank.

So, with only two variables to consider, why is it so challenging to be able to choose the right tradelines? The answer is that most people’s credit files are fairly complex due to their depth of credit history. People have numerous data points in their credit file and all that data plays some sort of role in calculating their credit score.

Every person’s credit file is unique, making it very difficult to discuss how tradelines may affect anyone “on average.” Additionally, there are multiple different credit scores, each with their own closely guarded algorithm that takes into account a very large amount of data points within someone’s credit report.

When choosing the best tradelines for your situation, it’s not just about buying the top tradelines in terms of price. To get the results you want, you will need to understand what is already in your credit file and how adding tradelines could affect the important factors in your file.

Adding tradelines to credit file

Most people’s credit files contain a lot of complex information, which can make it difficult to predict how adding tradelines will affect one’s credit.

Credit Limits and Utilization Ratios

Let’s discuss each of these variables individually, starting with credit limits.

In most of the free credit score simulators out there, you can only change a very limited number of variables. So when it comes to trying to guess how a tradeline may affect your credit score, it usually only allows you to enter a new credit limit amount and then it generates a new credit score estimate.

The credit score simulator (sometimes referred to as a credit score calculator) assumes you are opening a new credit card with whatever limit you type in. Essentially, it is only looking at your overall utilization ratio, and not taking into account the age that you would gain from adding a seasoned tradeline.

As far as utilization, many professionals would suggest that you want to stay below 20% ideally. From our experience, we have seen that utilization ratios of 30% – 40% or higher start to pull credit scores down.

The higher the utilization ratio, the more your credit score will decrease, even if these accounts are always paid on time. Most credit specialists would recommend keeping your overall utilization ratio below 20% or even lower.

However, things get much more complicated in instances where someone has several credit cards with different utilization ratios.

Let’s say for example that someone has seven established credit cards, where two have zero balances, two are at 50% utilization, one is at 75%, and the last two are completely maxed out.

Sure, buying some tradelines with high limits might be able to get the overall utilization down to the targeted 20% level, but that does not eliminate the fact that that person still has five credit cards with high utilization, and each of these five cards is pulling down the credit score down due to high individual utilization.

Can a High-Limit Tradeline Help Lower Someone’s Overall Utilization Ratio?

In theory, a higher-limit tradeline can help lower someone’s overall utilization ratio, but this alone may not completely solve the problem of having credit cards with high utilization. Negative factors are always going to play a role in the credit score and having any high-utilization credit cards is a negative factor.

However, having a lower overall utilization ratio would be a positive change and may still yield some benefit despite the fact that the individual credit cards with high utilization will still remain in the equation.

We have even heard of metrics in the secret credit score algorithm that look at the percentage of high-utilization credit cards in someone’s credit file relative to the total number of credit cards they have.

For example, if someone has two credit cards, one with a $5,000 limit where they owe $5,000 on it and another credit card with a $25,000 limit where they owe zero on it, their overall utilization ratio is relatively low at 16.67% but they would be at 50% on the percentage of revolving accounts with high utilization. In this example, the 50% ratio of high utilization cards could possibly have a negative impact even though the overall utilization ratio is within the ideal range.

There may be other reasons why some people are interested in adding higher-limit tradelines to their credit file that have nothing to do with the typical goal of raising their credit score.

For example, some people believe that having higher-limit accounts in their credit file may increase their odds of getting approved for higher-limit credit cards or other types of loans. We do not have any knowledge about the validity of these beliefs, nor do we help people with funding in any way, but we are aware that such strategies exist in the marketplace.

This is an additional reason why some individuals might be interested in a high-limit tradeline even if there is not very much age on the account, which also makes the cost of a tradeline cheaper.

Examining the Age of a Tradeline

Factors that affect your credit score by Tradeline Supply Company, LLC

This leads us to the second variable to discuss, which is the age of the tradeline. We feel that age is the most important of the two factors of a tradeline. In general, a credit score is broken down into the following categories:

35% your payment history
30% how much you owe
15% length of credit history
10% credit mix
10% new credit

The utilization ratios fall under the “how much you owe” category, which accounts for about 30% of your score. Again, if you are only improving the overall utilization ratio but you are still being pulled down by individual card utilization ratios, then you may not be benefitting from the full 30% of the power of this category. Your benefit may be as little as 10-15% if you still have individual cards with high utilization ratios.

However, the tradelines we offer are going to have a perfect payment history, which is the category that can affect your score by as much as 35%. They also have the ability to affect the “length of credit history” category which accounts for another 15% of the score.

When added together, the payment history (35%) plus the length of credit history (15%) amounts to about 50% of a credit score. These two categories, which account for about 50% of a credit score, are both affected by the age of the tradelines.

This is why we believe age is the most important factor of tradelines, making “seasoned” tradelines the most valuable type.

Seasoned tradelines

“Seasoned” tradelines, or those that are at least two years old, are the most valuable type of tradeline.

In the age category, just like the utilization category, there are several different variables. To name a few, the credit score algorithm may look at your average age of accounts, the oldest account in your profile, the number or percentage of non-seasoned accounts (less than 2 years old) in your file as well as the number or percentage of seasoned accounts in your file.

Also, different scoring models may or may not include data on closed accounts and have varying degrees of how much weight they give to closed account information.

To illustrate an example, we have seen a credit report of a person who had over a 700 credit score with no open accounts at all. So 100% of that 700+ credit score was made up of data from closed accounts only.

We also know the opposite can be true, where someone has zero open accounts but several closed accounts with derogatory information and their credit score is very low, all from closed account data. So it is safe to say that closed accounts can still play a significant role in someone’s credit score since it is still part of their credit history.

One of the most important variables related to the length of credit history is the age of the oldest account in someone’s credit profile. This variable is very straightforward, except that it may be split into two categories: open accounts and closed accounts. It is assumed that open accounts usually weigh more than closed accounts and obviously, older accounts are better.

The most common age-related variable that most credit advisors will talk about is the average age of accounts. It is commonly believed that the average age of accounts may be the most powerful factor in the age category.

As we will see in the examples below, in working with tradelines, most people underestimate how difficult it is to significantly affect an average, especially when there are multiple accounts already in your credit history.

Calculating Your Average Age of Accounts

For illustration, here are a few hypothetical examples of how to calculate the average age of accounts and how new tradeline data gets factored in.

Example 1: Thin File for Simple Illustration

Card 1: 0.5 years old
Card 2: 0.5 years old
Card 3: 1.5 years old

The average age of accounts in this example is 0.83 years. The way you figure that out is to add up the total number of years and divide that by the total number of accounts. (0.5 + 0.5 + 1.5 = 2.5 years total, then divide by 3 = 0.83 years average.)

If your goal was to get the average age of accounts up to 2 years old by adding one tradeline, the new tradeline would have to be about 6 years old. (0.5 + 0.5 + 1.5 + 6 = 8.5 total years divided by 4 total accounts = 2.1 average age of accounts.)

Notice how much older the new tradeline had to be in order to simply get the average age of accounts to be 2 years old for a very thin file. Many people would not have guessed that they would need such an old card just to get the average to be 2 years old.

To illustrate this point, if someone were to only add a 4-year-old tradeline to this mix, the average age of accounts would then only be 1.6 years, and this is assuming a person only has 3 revolving accounts (opened or closed) in their credit file, which is very rare.

The more accounts a person has, the less impact a single tradeline will have due to the simple mathematics of calculating an average.

Example 2: Established Credit File With Multiple Open & Closed Accounts

Tradelines affect average age of accounts

The more accounts there are in your credit file, the more difficult it will be to affect the average age of accounts.

Card 1: 4 years old
Card 2: 8 years old
Card 3: 6 years old
Card 4: 4 years old
Card 5: 7 years old
Card 6: 7 years old (closed account)
Card 7: 15 years old (closed account)
Card 8: 13 years old (closed account)
Card 9: 9 years old (closed account)
Card 10: 12 years old (closed account)

The average age of accounts here is 8.5 years old. The way you calculate that is to add up the total number of years and divide that by the total number of accounts. (4 + 8 + 6 + 4 + 7 + 7 + 15 + 13 + 9 + 12 = 85 years, divided by 10 accounts = 8.5 years average age of accounts.)

Let’s say hypothetically that the person’s goal is to get their average age of accounts up to 10 years old by adding a single tradeline.

Please stop and take a moment to guess how many years old a new tradeline would need to be in order to make the average age of accounts 10 years in this example.

The Answer:

They would need to add a tradeline that is 25 years old in order to get the average age of accounts to be 10 years. (4 + 8 + 6 + 4 + 7 + 7 + 15 + 13 + 9 + 12 + 25 = 110 total years divided by 11 total accounts = 10 year average age of accounts.)

Notice how huge of a jump in years is needed in order to change someone’s average if they already have a lot of accounts in their credit file, even if some of them are closed accounts. Most people underestimate how difficult it is to really change an average and even most “professionals” (who are usually just commissioned salespeople) underestimate how these numbers actually work out.

Our tradeline calculator can help you figure out how buying tradelines could affect your credit.

Our tradeline calculator can help you figure out how buying tradelines could affect your credit.

Until you actually do the math yourself, do not just blindly trust what someone suggests for you. To easily calculate your own average age of accounts and utilization ratios and see how those variables change when you add seasoned tradelines, try our Tradeline Calculator.

A Common Mistake People Make When Buying Tradelines

It is easy to see how in the second example above, if this person did not do the math, they might purchase the wrong tradeline and be disappointed.

Let’s say they purchased a tradeline that is 18 years old with a $20,000 credit limit that cost $1,000. They might just assume that since it was an expensive tradeline with a lot of age and a high limit that it should “obviously” be super powerful and they should definitely see positive results.

However, in reality, the 18-year-old card would only increase the average age of accounts to 9.4 years, and it is very possible that increasing one’s average age of accounts from 8.5 years to 9.4 years may not have very much of an impact on their overall credit picture.

As you can imagine, this person could easily be very disappointed in their results for the reason that they simply did not do the math and were not aware of how to choose the best tradeline for their credit file.

As another example, what if this person were to choose to purchase a tradeline that is 7 years old with a $30,000 limit? On the surface, that might look like a decent tradeline to buy, but it would actually decrease their average age of accounts and consequently, it could even hurt their credit score, even though that tradeline might have a $750-$1,000 price tag.

We illustrate this to show that not knowing how tradelines work can actually hurt your credit and be a complete waste of money. For this reason, we believe education is the best service we can offer. Make sure to read our list of common mistakes made when buying tradelines to be aware of other pitfalls to avoid.

Thinking about credit report and buying tradelines

Although credit reports can be complex, it’s important to have a good understanding of your file before choosing which tradelines to buy. Image by Jack Moreh.

Conclusions on Choosing the Best Authorized User Tradelines

Authorized user tradelines can be very effective for many people, assuming that they added superior tradelines to what they already have in their credit file. On the other hand, since many people are not educated about how the system works, it can be easy for people to choose the wrong tradelines that do not help them very much.

Compounding the confusion, it is very difficult to find the best tradeline company to work with. We believe that educating our customers is the best thing that we can do for our community and offering affordable tradelines makes them more accessible to the people who need them most.

Use our Tradeline Calculator to help you understand the key factors relating to the tradelines in your credit file and to help point you in the right direction for your next tradeline. For even more educational resources on tradelines, visit our blog.

Read more: tradelinesupply.com

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