A trade line is simply an entry on your credit report that contains the details of your credit history with a single lender. In essence, the trade line is the building block from which your credit rating is constructed. If you are trying to establish credit for the first time or attempting to rebuild your credit in the wake of financial problems, some good trade lines on your credit record is a must. It’s easier to add trade lines than to a credit report than many people think.
Ask your parents or another close relative to add you as an authorized user to one or more of their accounts. Most lenders allow and even encourage parents and young people to make such arrangements. In effect, you get to use your parent’s good credit as a jumping off point for establishing your own credit history.
Look for a co-signer for a loan or apartment lease. Again, a parent, close relatives or trusted fried is your best bet. Keep in mind that whoever your co-signer is, he is trusting you to act responsibly and not in a way that would harm the good credit he has worked hard to build.
Apply for a credit card marketed to students if you are currently in college or vocational school. Lenders offer the cards to students with little or no credit record simply to establish relationships with promising young consumers. Good grades help. Credit card issuers have found that top students tend to be the best credit risks, so a good GPA will improve your chances of being approved.
Contact local department stores and other merchants that offer credit accounts. Quite often you’ll find one who will let you open an account with a low credit limit to start with, especially if you’ve been a good customer for some time.
Request that anyone who already extends you credit to report your record of timely payments to all three credit bureaus. This is one of the resources people often overlook. If you rent an apartment, pay utilities or even have a cellphone, you have an existing credit account. Not all companies will cooperate, but many will.
Apply for a secured credit card if no other alternative is open to you. A secured credit card works like any other credit card, except that you must deposit enough money with the card issuer to guarantee the money you borrow. The big drawback to secured cards is that they are expensive, with high annual fees and interest rates. The best strategy if you use this method of adding trade lines to your credit history is to pay off the balance on the card each month, thereby eliminating that expensive interest.
Monitoring your credit report is vital. You want to be sure the information in your trade lines is reported by creditors and that it is correct. You are entitled to a free copy of your credit report each year from each major credit reporting agency: Equifax, Experian and TransUnion. The Federal Trade Commission, FTC, only authorizes one provider, Annual Credit Reports, to provide free reports. You’ll find links to Annual Credit Reports on the FTC website devoted to free annual reports and credit reporting (See Resources).