DEFINITION of ‘Trade Line’
Credit account records that are provided to credit reporting organizations. A trade line, also spelled as tradeline, can include a mortgage, line of credit, credit card, or any other credit-related item that is provided by a financial institution or lender.
BREAKING DOWN ‘Trade Line’
Trade lines may contain a variety of different data points related to the creditor, the lender, and the type of credit that is being provided. The trade line often contains the name of the creditor or lender, the account or other identifier for the type of credit being provided, the parties responsible for paying the loan, and the payment status of the account. The trade line will also contain particular account milestones, such as the date the credit was extended and closed, the credit limit, the maximum amount ever owed, the date of first delinquency, and the total amount owed as of the last report.
One of the most important features of the trade line is the payment status. This indicates whether or not payments for the loan are being made on time, and how late the payments are if they are not being made on time. If the payments are being made on time, the payment status will indicate that the payments are being made according to the terms of the credit agreement. Late payments are usually grouped in a range of days according to how late they are. For example, 30 days late, 60 days late, or 90 days late. The payment status may be set to “charge off” if the creditor deems it unlikely that the debt will be repaid, and the status may also indicate that the credit recipient has entered bankruptcy.
Trade lines are used by credit reporting bureaus to develop an individual’s credit score. Higher credit scores are often given to individuals who have several trade lines active, such as a student loan, mortgage, or credit card, for at least two years, and that have neither exhausted the credit line or missed payments.