What Are Trade Lines?

Just about anyone who has ever opened a credit card account, leased a car or shopped for a mortgage knows maintaining positive feedback on a credit report could result in paying less in annual fees and penalties. An integral makeup of a credit report is based on trade lines, which contain information regarding every credit account that is listed on a credit report. Trade lines contain information regarding a consumer's history including debt load and current balance on credit accounts.

Credit Cards

Consumers' most frequent experience with trade lines will be the feedback they entail from paying or not paying their credit card bills. Consumers can begin establishing trade lines with their credit at age 18. Trade lines directly contribute to an individual's credit score and can dictate what level of credit that a consumer is or is not eligible for.

Car Payments

Besides the cost of housing, consumers will likely spend their most money on car payments. For individuals who lease, trade lines effect not only their credit report, but also the annual percentage rate, or APR. The annual percentage rate a consumer pays will likely be determined by their own trade lines. Having a negative history of trade lines will likely cause a consumer to pay a larger APR, or may prohibit a creditor from issuing them trade lines.

Mortgages

In general, mortgage lenders prefer to work with consumers who have anywhere from three to five active trade lines, or open lines of credit. In addition to the value or debt currently associated with a consumer's trade lines, lenders will consider how long each line has been open. On average, lenders prefer consumers who have open trade lines for the past 12 to 24 months

Secured Credit Cards

For consumers with poor trade lines on their credit reports, there are secured credit cards. Unlike conventional credit cards, secured credit cards are offered by banks and other lenders for a fee. In addition to an annual fee, consumers with poor trade lines are often required to leave a deposit in cash form.