What Are The Different Types of Tradelines
When we talk about tradelines on our website or in our articles, we often use the basic term in a very basic form. But this can be confusing to the people who don't understand what tradelines actually are, or that they exist in various types.
To begin, let's make it very clear that a tradeline is nothing more than a line of credit. It is a loan, an extension of credit, and recordable product used by lenders to provide consumers with cash/credit/currency when lending or providing financing.
At the core, there are really only two basic types of tradelines - installment type tradelines or revolving type tradelines. Below we'll explain each.
Installment tradelines are what is considered to be a generally fixed tradeline that is delivered in full, in advance. The sum is then repaid with interest in smaller installments over a pre-determined timeframe. Student loans, auto loans, personal loans, mortgages, and business loans are all great examples of installment loans.
Revolving tradelines are lines of credit that may have a cap, but are automatically renewed as the debt is paid off. Credit cards accounts are the best example of this. You may have a $5k credit limit, and as you use your balance the amount of available credit decreases until that amount is paid back or depleted. With a revolving tradeline, there is no fixed time period for you to pay your entire balance, however, the longer you take to repay, the more interest accrues and you'll end up paying much more over time.
What Are The Other Types Of Tradelines
Now that this has been made clear, we can explain that authorized user tradelines - while technically a tradeline - are more of an industry term than anything else. When you're an authorized user on someone else's credit card, that user has included you on their tradeline yet they remain solely responsible for all charges and payments on that revolving line of credit.
When an individual buys access to another individual's credit card tradeline, the use of the actual credit line itself is not included. This type of tradeline is a mere tool for building credit. The buyer is essentially purchasing a product that will appear on their credit report. We can think of the product as the age, credit limit, and credit utilization of this tradeline, and the resulting impact it will have on a credit score. The seller does not provide the buyer with a physical card nor with the permission to spend money by using credit, and the buyer has no means of doing so since the card information (number, PIN, etc.) is never provided to them.
So, remember that any and all types of credit or financing are considered to be tradelines. Authorized users may be permitted to utilize a card when they cardholder is a friend or family member, but a credit card tradeline which has been purchased through a company is done with the intention of improving your credit score, and nothing more.
Since we are in the industry of selling credit card tradelines to people as a tool for raising their credit scores, we consider our product to be "tradelines". This should not be confused with what it really means to hold a tradeline, or, that the general term "tradeline" is widely used among finacial insitutions for various kinds of credit and lending - either as installments or revolving lines of credit.
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