Trade lines can make or break your credit history. The number of open trade lines you have open on your credit reports and the amount you have available to you can have a dramatic effect on your purchasing power. However, not all trade lines are created equal. Credit cards, for example, don't have the same impact as installment loans on cars or houses. In order to make your credit history reflect the best that it can be it's important to have as many positive trade lines and variations of trade lines as possible. Here is your guide on how to add a credit trade line to your personal credit history that will reflect well in years to come.
Before You Begin
Review your credit report. Look at the amount of open trade lines you have and types of credit you have access to. If you have five credit cards and no personal installment loans or car loans, you will need to add trade lines that reflect what is currently lacking on your credit report.
Account for your FICO score. Your FICO score is a score between 380-800 that is a "ranking" of how good or poor your credit history is. The lower your FICO score the less likely you are to be approved for traditional installment loans like personal bank loans, car loans or home loans.
Assess your ability to pay back any trade lines you have open. Look at your budget and determine a workable monthly payment for any new trade lines that you intend to establish. The greater your capacity to make higher monthly payments the more likely you are to be approved for a greater trade line of credit.
Choose the type of installment loan or personal loan you need to add to your credit portfolio. Once you have determined which type of account will best suit your needs, it's time to begin the application process.
Look at loans from at least five different banks. It costs nothing to review credit terms and fees, so ensure that you get an estimate from those banks and as well as any application fees or annual fees attached to your credit line(s).
Add the Tradeline
Apply for the type of loan that will benefit your credit the most. Normally personal installment loans of greater than $50,000 have the greatest impact on your credit score. The application process for many of these can begin easily on line.
Be prepared to supply your paycheck stubs, W-2 forms or other ways to verify your income to your loan processor. This information is key in providing the information the bank needs to verify your ability to repay your installment loan.
Sign your loan disclosures. This will successfully open your new installment account and will allow the firm to report your account to the three credit bureaus: Experian, Equifax and Transunion. Once this is completed you will see evidence of the open account within 30 to 60 days of the transaction. You have successfully added a trade line to your personal credit history.
Repay your trade lines on time to be able to have the most positive reflections of your credit report.