How to Increase Your Credit Limit

August 20, 2019CreditBy toptierfinancial

If you have credit cards with low credit limits, you may be interested in increasing your credit limit. In this article, we’ll talk about why your credit limit is important, reasons to increase your credit limit, when and how to request a credit line increase, and more. Keep reading for everything you need to know about how to increase your credit limit.

How Does Your Credit Limit Affect Your Credit Score?

The obvious reason why you should care about your credit limit is that it controls the amount you can spend on that particular credit card. But beyond that, your credit limit also indirectly affects your credit score.

Although credit limit itself is not a factor in credit scores, it plays a role in your credit utilization ratio, which is an important part of your credit score. In fact, utilization makes up about 30% of a FICO score.

Your credit utilization ratio is the amount of debt you owe divided by your credit limit, typically expressed as a percentage. For example, if your credit card has a $10,000 credit limit and you owe $2,000 on it, your utilization on that card is 20% ($2,000 / $10,000 x 100% = 20%).

The above example is an individual utilization ratio since it is the utilization ratio of a single card. Your overall utilization ratio is similar, but it includes all of your revolving debt added together divided by the total credit limit of all of your revolving accounts. Both individual and overall utilization are accounted for in your credit score.

Why is utilization such an important part of one’s credit score? High utilization means high risk for lenders. If you are using most or all of your available credit, this indicates that you may be overextended and you might have trouble paying off your debts. Therefore, high utilization lowers your credit score because it means you are more likely to default.

Utilization (how much you owe) makes up 30% of your FICO score.

On the other hand, low utilization means you are not using very much of your available credit, which indicates to lenders that you are at low risk of defaulting. Therefore, keeping your utilization low is a good thing for your credit score.

Why Increase Your Credit Limit?

To bring this all back to your credit limit, remember that your credit limit affects your utilization ratio. Consider an example in which someone owes $500 on a $1,000 limit credit card. Their utilization is 50%, which is high enough to potentially have a negative impact on their score. But if they were to increase their credit limit to $2,000, their utilization would go down to 25% ($500 / $2,000 x 100% = 25%), which could help out their credit score.

Essentially, increasing your credit limit helps lower your utilization ratio, which can benefit your credit health.

Plus, it gives you more spending power if you ever need it to make a big purchase.

One important caveat: this strategy only works if you do not run up the balance on your credit cards. If increasing your credit limit means you will just continue to spend up to your credit limit and get in more debt, then it’s probably not a good idea.

How to Increase Your Credit Limit

There are a few different ways to go about raising your credit limit.

Wait for the credit card issuer to automatically increase your credit limit.

Lenders will often automatically bump up your credit limit after you have had the credit card after a certain amount of time, provided you have used it responsibly and paid on time every month. However, you usually have to wait several months after opening a card to be considered for a credit limit increase.

Request a credit limit increase.

If you haven’t gotten an automatic credit limit increase, you can request one. You can do this over the phone or on the credit card issuer’s website.

Generally, if you apply for a credit line increase online, this will result in a hard credit pull. However, if you call and talk to a representative, you may be able to get an increase with only a soft pull, depending on the situation.

When you request a credit line increase, you should be ready to provide your total annual household income, your employment status, and the amount of your monthly rent or mortgage payment. Credit card issuers typically state that you can include income from someone else if that person’s income is regularly used to pay your expenses.

Some lenders may ask you to explain why you need or deserve a credit line increase, so be prepared to explain the reason for your request. They may also inquire about how much you spend on credit cards each month.

When to Request a Credit Line Increase

It’s best to wait until the right time to request a credit line increase. Just like applying for a new credit card or loan, you want your credit and your income to be in good shape when you request it.

Potentially good times to request an increase:

A good time to request a credit line increase is after you get a pay raise at work.

After you receive a raise
After you have been a responsible cardholder for at least 6 months
If you have not requested an increase in at least 6 months
When you do not have many inquiries on your credit report
When your credit score is high

Situations when you might want to hold off:

If you lose your job or take a pay cut
If you have recent late payments or other derogatories
If your cards are maxed out or at high utilization
If you have only been making the minimum payments on your card
If your account is less than 6 months old
If your credit limit has changed within the past 6 months
If you have applied for multiple other credit cards or loans recently
When your credit score is low

How Much Should You Request?

There is no hard-and-fast rule when it comes to how much of an increase to ask for.

You could try calling your bank and asking the representative if there is an amount they could approve without doing a hard pull.

Another approach is to ask for more than you think you need. If the bank does not approve the full credit line increase that you asked for, they will often counter with the maximum amount that they can offer you.

Will Requesting a Credit Limit Increase Affect Your Credit Score?

Depending on the lender and the amount that you request, the credit card issuer may conduct a soft or hard inquiry on your credit. They want to see what your credit report looks like before taking the risk of granting you even more credit.

Check with your credit card issuer to see if requesting a credit limit increase will trigger a soft or hard inquiry.

Are inquiries really killing your credit? Click the image to read the article.

As we discussed in “Are Inquiries Really Killing Your Credit?” a hard pull could reduce your credit score by a few points, but it’s not the end of the world. As long as you keep your inquiries to a minimum, it shouldn’t present much of a problem. It’s when you have several recent inquiries on your credit report that you start to look like you are desperate for credit and you may get denied by lenders.

However, as we discussed earlier, the more significant potential impact to your credit score is the decrease in your utilization ratio if you do get approved for a credit line increase. Since utilization makes up about 30% of a credit score, improving that factor could benefit your score and would likely outweigh the impact resulting from a hard inquiry.

What Are the Downsides to Increasing Your Credit Limit?

Besides the impact on your credit score of potentially getting a hard inquiry, there are a few other drawbacks to consider when increasing your credit limit.

Some credit card issuers may charge sneaky fees to increase your credit limit. If you don’t want to pay a fee, make sure to check the terms of your card before requesting a credit line increase.

In addition, having access to more credit could encourage you to spend more, which could end up doing more harm than good to your credit score and to your overall financial health.

Other Ways to Increase Your Credit Limit

If you can’t get a credit line increase on an existing card, you can open a new credit card.

You don’t necessarily have to ask for a credit line increase if you want to get a higher credit limit.

Another option is to transfer some or all of your credit limit from another credit card to the card you want to extend. However, with this method, the two cards need to be from the same bank, and not all banks allow customers to do this.

If your bank does allow credit limit transfers, you could open a new credit card with them, take advantage of any signup bonuses offered, and then transfer the limit to your older card.

If transferring is not an option, opening up a new credit card with any bank will still increase your overall credit limit and utilization ratio, assuming you do not run up a balance on the card.

Have you tried requesting a credit limit increase before? Which of these methods do you plan to try next? Let us know in the comments below!

Read more: tradelinesupply.com

How to Get an 850 Credit Score

August 19, 2019CreditBy toptierfinancial

People who are serious about improving their credit often wonder what it takes to get the highest possible credit score. For the FICO 8 credit scoring model, the perfect credit score is an 850. Only 1.2% of consumers have the elusive 850 credit score.

There are many other credit scoring models that are used for different purposes and may have different credit scoring ranges. However, since FICO 8 is the most commonly used credit score, we will use 850 as the benchmark for the ideal credit score.

Keep reading for our tips and tricks for getting the highest credit score possible: the coveted 850 credit score.

Payment History — 35%

Most people who have an 850 credit score have seven years of perfect payment history.

Your payment history is the biggest slice of the credit score pie, so even one late payment or missed payment can significantly affect your score. Negative items can stay on your credit report for up to seven years, so if you miss a payment, you may not be able to achieve a perfect 850 credit score until at least seven years have passed!

To safeguard against the possibility of forgetting to make a payment, consider setting up automatic bill pay for all of your accounts. Be sure to continue to check your accounts regularly in case of any system errors.

If you do miss a deadline once in a blue moon but have otherwise been an upstanding customer, try negotiating with your creditor to see if they will forgive the late payment and wipe it from your record.

FICO says that 96% of “high achievers,” or those with FICO scores above 785, have no missed payments on their credit report.

Essentially, to get an 850 credit score, you just need to follow one simple strategy: make all of your payments on time for a long time. We will further discuss the connection between payment history and time in the “Length of Credit History” section below.

Credit Utilization/How Much You Owe — 30%

The amount of debt you owe compared to your total credit limit is your credit utilization ratio. To get a perfect credit score, you’ll want to keep this ratio as low as possible, both overall and on each of your individual tradelines.

According to Experian, “Among consumers with FICO credit scores of 850, the average utilization rate is 5.8%.”

A study by VantageScore and MagnifyMoney found that people with the best credit scores and people with the worst credit scores actually had similar amounts of outstanding debt. However, those with the best scores had an average total credit limit of $46,700—16 times the credit limit of those with the worst scores!

Therefore, for the high scorers, that outstanding debt made up a much smaller percentage of their total available credit than those with low credit limits and poor scores, which highlights the importance of the overall utilization ratio.

This study reported that the average credit card user has an overall utilization ratio of 20%, which is generally considered to be a safe number for maintaining decent credit. To become someone who has an 850 credit score, however, you’ll need to keep it around 5% or lower.

While consumers with 850 credit scores do use credit cards, they tend to keep their utilization ratios around 5% or lower. Photo by Ellen Johnson.

In addition, keep in mind that even if you have a low overall utilization ratio, individual cards with high utilization could still bring down your score.

As a hypothetical example, let’s say you have two cards: one with a $10,000 limit and a $0 balance and the other with a $1,000 limit and a $900 balance. Your total available credit is $10,000 + $1,000 = $11,000 and your total debt is $900. Therefore, your overall utilization ratio is $900 / $11,000 = 8% utilization, which is a very good number.

However, your account with the $1,000 limit has a 90% individual utilization ratio! Since you only have two accounts, that means 50% of your accounts have high utilization, and that could negatively affect your credit. According to creditcards.com, maxing out just one credit card can reduce your score by as many as 45 points.

To get around this problem, if you have any individual cards with high utilization, consider transferring the balance to other accounts to keep the utilization ratio on each account as low as possible.

You could also request credit line increases from your creditors, which could lower your utilization ratios and benefit your score.

Another way to help with overall utilization is to add low-utilization tradelines to your credit file.

Length of Credit History (Age) — 15%

This category takes into account age-related factors such as the average age of your accounts, the age of your oldest account, and the ratio of seasoned to non-seasoned tradelines. (A seasoned tradeline is at least two years old, which is when the account is believed to have a more positive impact on your credit score.)

The more age your accounts have, the more they will help your credit score.

Age goes hand-in-hand with payment history, because the more age an account has, the more time it has had to build up a positive or negative payment history. Together, age (15%) and payment history (35%) make up 50% of your credit score, which shows how important it is to open accounts early and make every single payment on time.

This is also why we always say that focusing on age is the #1 secret to unlocking the power of tradelines.

According to FICO, the age of the oldest account of people who have 650 credit scores is only 12 years, compared to 25 years for people who have credit scores above 800. In addition, individuals with fair credit have an average age of accounts of 7 years, compared to 11 years for those with excellent credit.

Cultivating an 850 credit score takes years of maintaining a positive credit history.

CreditKarma reports that a 2011 study found the average length of credit history for consumers with 850 credit scores to be 30 years.

We have an in-depth discussion of which age tiers are most significant in our article, “Why Age Is the Most Valuable Factor of a Tradeline,” but the bottom line for getting the best credit score is simply to get as much age as possible. Seasoned tradelines can help by extending the age of the oldest account and the average age of accounts.

Maximizing this factor also means not closing old accounts, because their age could be helping your score. To ensure old, dormant accounts don’t get automatically closed by the banks for inactivity, try to use them at least few times a year.

Also, keep in mind that it may be impossible to achieve an 850 credit score without a certain amount of age, even if you do everything else perfectly. So if you have stellar credit habits but haven’t yet been able to join the 850 credit club, you may just need to wait patiently.

Credit Mix — 10%

While the mix of credit is one of the least important factors in a credit score, to get a perfect credit score of 850, you may still need to optimize this factor.

In this category, credit scores reward having a balanced mix of several different accounts, including both revolving credit and installment loans. This is because creditors want to see that you can successfully manage a variety of different types of credit.

As an example, a credit file that includes an auto loan, a mortgage, and two credit cards has a better credit mix than a credit file that has four accounts that are all credit cards.

About the “credit mix” credit score factor, FICO says, “Having credit cards and installment loans with a good credit history will raise your FICO Scores. People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly.”

The total number of accounts is also considered, with more accounts generally being better, up to a certain point.

FICO also states that high score achievers have an average of seven credit card accounts in their credit files, whether open or closed.

Auto loans are common among people who have 850 credit scores.

If you are looking to improve your credit mix statistics, adding authorized user tradelines can increase the total number of accounts and help diversify one’s credit file.

850 scorers also have installment loans in their credit files. According to Experian, the average mortgage debt for consumers with exceptional credit scores (800 or above) is $208,617. In addition, people who have FICO scores of 850 have an average auto-loan debt of $17,030.

Experian says, “In every other debt category except mortgage and personal loan, people with perfect scores had more open tradelines but less debt than their counterparts with average scores—underscoring the value of being able to manage debt while having numerous credit accounts.”

New Credit — 10%

The “new credit” category of your credit score refers to how frequently you shop for new credit. This includes opening up new credit cards and applying for loans, for example. This “new credit” activity is reflected in the number of inquiries on your credit report.

Since seeking new credit makes you look like a higher risk to creditors, each hard inquiry has the potential to drop your score by a few points. Therefore, if you are going for the enviable 850, it’s best to avoid applying for new credit for a while.

If you need to shop for an auto loan or mortgage, be sure to complete all your applications within a two-week window in order for all of the credit pulls to count as one inquiry. For credit cards, however, each inquiry will be typically be counted individually.

Fortunately, inquiries only remain on your credit report for two years, and FICO scores only consider inquiries that occurred within the past year, so it shouldn’t take long for your credit to recover if you do have new credit inquiries on your report.

More Tips on How to Get an 850 Credit Score

In addition to optimizing each of the above five categories that factor into your credit score, it is also important to regularly check your credit reports and dispute inaccurate information.

In addition, those with very high credit scores rarely have serious delinquencies or public records on their credit reports, such as bankruptcies or liens. Obviously, this will be easy to avoid if you follow all of the suggestions above, but if you already have a messy credit history in your past, it could take up to 7-10 years to recover enough to get an 850 credit score.

850 Credit Score Benefits

What are the benefits of being in the 850 credit club? In reality, you’ll be able to take advantage of the benefits of having an excellent credit score whether you have a 760 credit score or an 850 credit score. You don’t need to score a perfect 850 to get the best credit cards or the best interest rates on loans.

That said, the main benefit of having the best possible credit score is bragging rights.

Final Thoughts on How to Get the Perfect Credit Score

While it’s probably not necessary to get an 850 credit score, it is smart to work toward that goal by managing your credit wisely, which will eventually get you into the upper levels of high credit score achievers.

The most important factors of your credit score are payment history, utilization, and age. Therefore, to keep your credit in pristine condition, you’ll need to make all of your payments on time, keep your utilization as low as possible, and maximize your credit age. Beyond that, you’ll also want to maintain a balanced mix of accounts and minimize new credit inquiries.

Finally, take advantage of your three annual free credit reports to make sure your credit reports are free of damaging errors.

To summarize, here’s an example of what the credit profile of someone who has an 850 credit score might look like:

No missed payments or delinquencies within the past seven years
A high total credit limit
The overall utilization ratio is 5% or lower
Individual credit cards each have low utilization, around 5% or lower
The oldest account is likely about 25-30 years old
The average age of accounts is at least 11 years
Typically has at least seven credit card accounts (whether open or closed)
Usually has an auto loan and/or a mortgage loan
May have additional installment loans
No inquiries within the past year
No damaging errors on their credit report

Read more: tradelinesupply.com

What Are Credit Scores and How Can Tradelines Help?

July 18, 2019CreditBy toptierfinancial

When it comes to credit scores, there’s a lot of confusion and misinformation out there. Our credit scores impact our lives in more ways than you might think, yet, unfortunately, they are complicated and difficult to understand. In this article, we’ll clear up what credit scores are, why they matter, how to build credit, and how to improve your credit score.

What Is a Credit Score?

A credit score is a 3-digit number that is meant to represent your credit risk, or how likely you are to default on a loan. This credit rating is calculated based on the information in your credit report, which lists your current and recent credit accounts.

To use an analogy, your credit report is like your school transcript: it is a list of your current and recent credit accounts and how well you did in paying them off on time. Your credit score rating is like your overall GPA: it sums up all of that credit history information into a single number.

While there are many different versions of credit scores, most lenders use a FICO credit score. Another credit score, called the VantageScore, was developed by the three major credit bureaus: Equifax, Experian, and TransUnion. The VantageScore is primarily used for educational purposes rather than lending decisions.

Both the VantageScore and the FICO credit scores range from a low of 300 to the highest score of 850. Lower numbers represent a higher likelihood of defaulting on a loan, which is considered bad credit, while higher numbers represent a lower likelihood of defaulting on a loan, which is considered good credit.

Why Is Your Credit Score Important?

If you ever want to buy something using credit instead of cash—a house or a car, for example—you’ll likely want to have a good credit score. Your credit score is what lenders use to decide whether or not they should loan you money and what the terms of that loan should be.

If you have a bad credit score or no credit score at all, you may have a hard time getting credit from lenders.

If you don’t have a credit score or credit history at all, lenders don’t have a way of judging your creditworthiness. Therefore, they may see you as too much of a risk and decline your request for credit.

If you do have a credit score, lenders will see it as a representation of how risky it is to lend money to you. A great credit score means you are a low-risk borrower, which means lenders can offer you low interest rates and other perks, such as credit card rewards.

On the other hand, a low credit score represents a high risk to lenders, since it shows that you may be more likely to default on a loan. To compensate for the higher risk of default, lenders charge higher interest rates and fees to those with poor credit scores—if they are willing to extend credit at all.

Your credit score doesn’t just affect your access to credit and the costs associated with using credit. Credit scores have increasingly been used for a variety of non-credit applications.

Phone carriers and utility providers may require a security deposit based on the results of your credit check.

A significant percentage of employers do credit checks on prospective employees, so a bad credit score could cost you your dream job.
Your credit score may affect what you pay for insurance, so you’ll want to have a good credit score if you want to get the best insurance rates.
Landlords often check credit scores of applicants to see how reliable they are in paying their bills.
Utility providers and even cell phone carriers may check your credit score to determine whether to charge you a security deposit upfront.

As you can see, credit scores affect a lot more than just your ability to get credit, and it is more important than ever to prioritize building your credit score.

What Factors Determine Credit Scores?

Although the specific algorithms behind credit scores are closely-guarded trade secrets, the general categories that affect credit scores are widely known. In general, here’s what makes up a credit score:

Payment history: 35%. This is the most important piece of your credit score, so even one late or missed payment can do a lot of damage.
Utilization (how much you owe): 30%. Your utilization ratio is the ratio of the amount of debt on all your revolving accounts (e.g. credit cards) to your total available revolving credit, expressed as a percentage. Credit scores may account for both your overall utilization ratio and the utilization ratio of each individual tradeline. The lower your utilization, the better for your credit score.
Length of credit history: 15%. This category considers factors like your average age of accounts, the age of the oldest account in your credit file, and the ratio of “seasoned” to non-seasoned tradelines. A seasoned tradeline is defined as one that is at least two years old, at which point it is believed that the account begins to have a more positive impact on your credit score. The more age your accounts have, the more they will help your credit score.

These five main factors affect your credit score.

Credit mix: 10%. Creditors want to see that you can responsibly use different types of credit, so they look for a variety of accounts in your credit report, including both revolving credit accounts and installment loans.
New credit: 10%. This credit score category takes into account any new inquiries and new accounts that you have added in the past 6 to 12 months. Creditors consider seeking new credit a risky behavior, so inquiries can hurt your score. Opening a new account can also have a temporary negative effect on your score since it has no age or payment history.

What Is a Good Credit Score?

Scores between 670 and above are considered good credit scores. Very good credit scores lie between 740 and 799 while excellent credit scores include scores of 800 and above.

Which credit score is the best? Only about 1% of Americans have the coveted 850, a perfect credit score.

Credit scores range between 300 and 850, with 850 being the best credit score possible.

How to Get a Good Credit Score

The most important factor of a good credit score is a history of on-time payments.

Here are some things that can help you get a good credit score:

A history of on-time payments
Low utilization ratios
Accounts that are at least 2 years old
A mix of different revolving and installment accounts
Minimal inquiries
Monitoring your credit report for errors

Learn more about how to increase your credit score with do-it-yourself credit repair strategies and our guide to how to get an 850 credit score.

What Is a Bad Credit Score?

According to Investopedia, credit scores of 579 or below are considered bad credit scores, with 61% of borrowers in this credit score range being predicted to become delinquent on future loans.

Credit scores in the range between 580 and 669 are considered fair because only 28% of these borrowers are predicted to become delinquent on future loans. Unfortunately, even those with fair credit scores often have difficulty getting credit and higher interest rates than those with good or excellent credit scores.

Bad credit scores can have serious consequences that reach farther than just your finances. For more on bad credit, its effects, and how to fix it, check out our article on bad credit.

Here are some things that can lead to a bad credit score:

Having too much debt can bring down your credit score.

Late or missed payments
High credit card balances
Low account age
Not enough accounts
Too many inquiries
Collections
Judgments
Foreclosure
Bankruptcy
Identity theft

How to Build Credit

To build credit, you’ll need to open your own credit accounts and keep them in good standing by always making payments on time. This is the foundation of a good credit score.

Once you build credit by piggybacking, you can open your own accounts to continue building your credit score.

However, as we mentioned, it can be difficult to start building credit since lenders typically want to see a credit score and credit history before extending credit.

The fastest way to build credit, especially for those who have a limited credit history, is to piggyback on the credit of someone else. Examples of credit piggybacking include getting a cosigner or guarantor in order to qualify for credit, opening a joint account with someone, or being added as an authorized user.

Once you have started to establish a credit history by piggybacking, you can continue to build up your credit by opening up more tradelines. You can also add tradelines to your credit file that already have years of perfect payment history to help balance out the effects of any derogatory accounts.

Remember, tradelines are the foundation of building credit because all credit starts with tradelines.

How to Improve Your Credit Score

If you need to fix your credit score, there are some strategies you can use to repair your credit score yourself, such as disputing errors on your credit report and paying down high credit card balances.

Since payment history makes up the majority of your credit score, the most important thing is to get all of your accounts current and make sure to make all payments on time in the future, and your credit score should gradually recover.

When it comes to boosting your credit score, lasting results will require patience, good financial practices, and knowledge of how the credit system works. Use our free educational resources to learn more about credit scores, building credit, and how tradelines can help add credit history to your credit report.

Ready to buy tradelines? See our updated tradeline list now.

Read more: tradelinesupply.com

What Is a CPN?

July 16, 2019CreditBy toptierfinancial

“CPN” or “CPN number” can stand for credit privacy number, credit profile number, or consumer protection number. A CPN is a 9-digit number that is often marketed as a replacement for your social security number (SSN).

Some sources claim that celebrities and government officials use CPNs to maintain their privacy, since SSNs are linked to a lot of personal information, but there is no documented legitimate source for a CPN. The Social Security Administration is the source for all SSNs and the Internal Revenue Service (IRS) is the source for all Employer Identification Numbers (EINs). These organizations do not issue CPNs and no other government entities issue such numbers.

You may have seen some businesses claim to sell CPNs as a way for consumers with poor credit to apply for credit with a “clean slate.” Since the CPN is a different number than your SSN, it does not have your credit report associated with it. These companies would like you to believe that you can purchase a CPN and use it instead of your SSN on credit applications, thereby hiding your credit history from creditors.

A CPN might sound like a good solution if you have concerns about privacy or if you have had trouble with your own credit and want to “start fresh.” However, you should exercise extreme caution when dealing with anyone trying to sell you a CPN. Keep reading to find out why.

How Do CPNs Work?

Sellers of CPNs often claim that the use of these numbers is permissible thanks to the U.S. Privacy Act of 1974. This act allows people to withhold their SSNs on documents if providing an SSN is not expressly required by federal law.

Since the federal government does not require that consumers provide SSNs on credit applications from private companies, you are free to withhold your SSN—however, the creditor is also free to deny you credit without this information. The U.S. Privacy Act of 1974 does not permit the use of CPNs on credit applications, contrary to what some credit repair companies would like you to believe.

The reason some people can get away with using false SSNs sold as CPNs on credit applications, instead of their real SSN, is that lenders sometimes fail to cross-verify applications thoroughly enough to confirm that the name on the application matches the listed SSN.

Although you may encounter many businesses offering “clean” CPN numbers for sale, they won’t tell you where these numbers came from or how they were obtained. They cannot provide legitimate documentation on where these numbers originated from.

Some sellers falsely claim that they have attorneys who can request a CPN number application from the government for you, but since the government does not issue CPNs, this is impossible. In reality, there are two ways that disreputable companies obtain so-called CPNs, both of which are illegal:

They use real SSNs that have been stolen from other people, often from children, the elderly, deceased people, homeless people, or those who are incarcerated. Scammers target these demographics because they are less likely to notice that their SSNs have been compromised. If someone promises to sell you a CPN that has a certain credit score or credit report, this is a big red flag that it is actually an SSN that has been stolen from someone else.
They create new, fake social security numbers that have not yet been issued by the United States government. They do this by using algorithms to generate 9-digit numbers and checking them against online databases to see which numbers can successfully pose as SSNs. They then sell these numbers as CPNs to unsuspecting consumers.

How to Get a CPN

The truth is that there is no legitimate way to obtain a CPN because CPNs are not issued or recognized by any government agency. As described above, the only way to get a CPN is to purchase a stolen or fake social security number on the black market.

While credit repair agencies and other companies who sell them may appear legitimate, there is nothing legitimate about buying a fraudulent SSN, which is what a CPN is. An SSN is a government identifying number and the government does not “sell” these numbers or offer CPN applications.

Some businesses may alternatively try to sell you an EIN, or employer identification number, promising that EINs are a legitimate form of CPNs. Although the IRS does issue EINs, these are exclusively for business use, which means that an individual hoping to improve their credit cannot legally use an EIN in place of their SSN.

In addition, according to the IRS, “EINs are issued for the purpose of tax administration and are not intended for participation in any other activities.” Businesses can obtain loans associated with their EIN number, but individuals may not use an EIN as an alternate SSN to obtain a personal loan.

The Social Security Administration has the authority to assign new SSNs in extreme cases, but the requirements are strict. You can only get a new SSN if your life is in danger or if you can prove that someone has stolen your number, is actively using it, and is causing you significant continued harm.

If you do get a new SSN, your new number is still linked with the credit from your old number, and they both receive special indicators that help alert creditors of this change, so this would not work as a way to leave your credit history behind.

Credit Privacy Numbers: Are They Legal?

To find out whether CPNs are legitimate and legal, we can go straight to the highest authority to see the official policy in writing. In this case, the highest authorities are the Federal Trade Commission (FTC) and the Social Security Administration (SSA). The FTC is a federal agency that polices business activities to help protect consumers and the Social Security Administration (SSA) is the agency that administers all Social Security-related programs, so these are the governing authorities when it comes to consumer protection, identity theft and fraud. The policies of these federal institutions override any other opinions or lower-level organizations.

According to the FTC, “It is a federal crime to lie on a credit or loan application, misrepresent your Social Security number, and obtain an EIN from the IRS under false pretenses.”

Clearly, using a CPN on any credit or loan application that asks for your SSN is misrepresenting your social security number. Therefore, engaging in this action is an act of fraud. There are many credit repair companies and other businesses who appear to be legitimate offering to sell you a CPN, but the bottom line is that if you misrepresent your SSN, you are committing a federal crime. This is verifiable in writing straight at the source, from the highest governing agencies.

The Federal Trade Commission has issued warnings against companies that sell CPNs to those looking to improve their credit, labeling such practices as scams. Here is what the FTC has said about CPNs:

“The credit repair companies may tell you to apply for credit using the CPN or EIN, rather than your own Social Security number. And they may lie and tell you that this process is legal. But it’s a scam. These companies may be selling stolen Social Security numbers, often those taken from children. By using a stolen number as your own, the con artists will have involved you in identity theft.”

If you follow this advice and use a CPN instead of your SSN on a credit application, you would be committing fraud, and you could face some serious charges and prison time.

The Social Security Administration has also been very clear about their official stance on CPNs:

“The proliferation of Credit Privacy Numbers (CPNs) is a relatively new SSN misuse scheme and a threat to the security of child identity information… Despite what many of these credit repair websites imply, consumers should know that CPNs are not legal.”

Boosting Your CPN Credit Score

Credit repair companies that sell CPNs and CPN tradeline packages often say that it is easier to “boost” the credit scores of CPNs and allow you to essentially hide bad credit that may be associated with your real SSN. While this tactic is becoming more common, the fact that it is happening does not make it legal. Hiding previous bad credit by using a replacement SSN is misrepresenting your identity and is considered fraud on a federal level.

It is not surprising that the lure of buying a CPN and starting over with a clean slate appeals to many people. When consumers encounter misinformation circulated by disreputable companies and hear about others having success using CPNs, it is easy to see how someone could fall for this trap and unknowingly participate in fraud. Unfortunately, the idea of using CPNs as a quick fix for credit is indeed too good to be true.

The sad fact is that ignorance is no excuse for breaking the law, and blaming the company for selling illegal services does not make the consumer immune to the potential consequences. If someone does decide to purchase a CPN and use it instead of their SSN, they are creating a verifiable paper trail of this action that could come back to haunt them many years down the road, since records would be created every time a person uses this tactic.

CPNs and Synthetic Identity Fraud

The use of CPNs has contributed to a new form of fraud called synthetic identity fraud, also known as synthetic identity theft. Synthetic identity fraud is the criminal practice of creating fake personas through a combination of real and fictitious data.

For example, scammers could combine the address of one person with the phone number of another and the SSN (or CPN) of a third. This false identity is then used to open credit accounts and make thousands of dollars in fraudulent purchases, followed by defaulting on payments. Since the fraudulent account is not linked to a real individual, it is difficult to track down the perpetrator and collect the debt.

It is estimated that this type of fraud causes billions of dollars in losses annually. Worse still is the damage it causes to victims whose identities are compromised.

This is where CPNs come into play. As we have seen, many CPNs sold to consumers are actually SSNs that belong to real people, especially children. Individuals seeking to “repair” their credit combine these stolen SSNs with their real name to essentially create a synthetic credit profile.

When criminals, or even unsuspecting consumers, use a child’s SSN to obtain credit and then default on the debt, this leaves lasting negative marks on the child’s record. When the child becomes an adult, they will face suspicion from lenders and difficulty obtaining credit due to the delinquencies on their record. They may not even be aware of the crime until they need to use their SSN for financial reasons as an adult. For example, they may apply for student loans and be denied as a result of the bad credit associated with their SSN.

The credit industry and the federal government are increasingly focusing on ways to crack down on this new type of fraud. In 2017, the FTC and the U.S. Government Accountability Office both convened groups of experts to discuss how to combat synthetic identity fraud going forward. According to the Department of Justice, U.S. Attorneys are ramping up prosecution of these cases.

In May 2018, the government passed a law that intends to reduce rates of synthetic identity fraud. The law requires the SSA to provide banks with an electronic system that can check whether an applicant’s name and date of birth matches their SSN within 24 hours. This system will make it easier and faster for banks to detect synthetic identities before they unwittingly provide credit to fraudsters.

Banks are also beginning to experiment with biometric technology that could help fight fraud, like using voice recognition security to detect if a certain voice has been associated with multiple identities.

With the increasing scrutiny on synthetic identity fraud and CPN fraud, buying or using a CPN for any reason is a dangerous game. If you were to obtain a CPN and use it instead of your SSN on documents, you would be creating a record of committing fraud that could be detected and traced back to you, especially as banks and the federal government start taking more severe action against fraud.

Avoiding a CPN Scam

When it comes to protecting yourself from CPN scams, your best bet is to stay far away from anyone trying to sell you a CPN, EIN, or anything that is supposed to somehow “wipe the slate clean” of your bad credit. Companies claiming that you can apply for a new line of credit in a way that is completely independent of your credit history are trying to mislead you.

Since lenders can look into your address, name, date of birth, and other information besides your SSN, they can easily tell that you have used a false SSN because they have other information they can use to verify your identity. For this reason, some CPN providers encourage their customers to change their names and addresses. If a company selling CPNs advises you to change your address, phone number, or anything else about your current identity, that is a huge red flag that they are committing fraud—and so are you.

Unfortunately, many scammers often prey on those who are most in need: those who are low-income and can’t afford another financial hit. Tricked by promises of clean scores and better credit, users are misled into buying a CPN.

The problems occur when CPNs are used to take out lines of credit. If the borrower fails to make payments, the lender may have little recourse since a fraudulent ID number was used for the borrower. At this point, an investigation may be opened, and investigators can follow the paper trail to the consumer.

Although there are stories of people getting away with using CPNs, keep in mind that sometimes investigations take place and charges are filed several years after the fraudulent activity occurred.

In 2015, a man from Louisiana was charged with felony racketeering, including theft, identity theft, and money laundering for defrauding hundreds of people and financial institutions with his credit repair company. He sold SSNs stolen from children as CPNs for hundreds of dollars each, claiming they would replace the SSNs of the unknowing victims of his scheme. He could face up to 75 years in prison if convicted.

In another current example that took place in 2018, Calvin Wayne Cade, Jr., of Oklahoma City, pleaded guilty to knowingly making a false statement to a financial institution by using CPNs to falsify his SSN in credit applications. The CPNs he used were stolen SSNs belonging to children born in 2006 and 2008. By using a fraudulent number on credit applications, Cade deceived banks, credit card companies, and retailers into thinking he had a better credit history than he really did.

With the lines of credit he received using these CPNs, he purchased vehicles, TVs, furniture, computers, and more, and then failed to make payments on the credit accounts, causing financial losses to the creditors. Cade was sentenced to 18 months in prison followed by three years of supervised release. He has also been ordered to pay $112,924.54 in restitution to the other creditors he defrauded.

Summarizing CPNs

A social security number is the most important and high-level personal identification number used in the United States. The government issues these numbers and they are not to be bought or sold on the open market. Misrepresenting your SSN is a federal crime, so by definition, using a CPN in place of your SSN is also a federal crime.

The proliferation and use of CPNs has become highly associated with a new form of fraud called synthetic identity fraud. Since this is relatively new the government is quickly catching up to illegal businesses who sell these CPNs which assist those who are looking to synthesize a new identity. Court cases as recent as 2018 are showing that people who engage in this type of fraud can receive heavy fines and prison time.

While there are many companies who advertise that CPNs are perfectly legal, the governing federal agencies have clearly stated this is not the case. The use of CPNs to obscure SSNs is illegal, period.

The government has prioritized synthetic identity fraud as a major concern of national security. In response, federal agencies including the Department of Homeland Security, the FBI, the Postal Inspection Service, the Secret Service, the Department of State, Social Security Administration, and the Federal Trade Commission are creating new task forces to investigate and prosecute fraudulent activity.

Why We Don’t Work With CPNs

Since using CPNs to apply for credit is a federal crime, we cannot assist consumers who are looking to use them. Our service is strictly for people using a valid SSN. We verify all of our clients’ SSNs through third-party databases before processing orders and we take all necessary measures to protect our credit partners, our clients, and creditors. Under no circumstances will we accept a CPN, and any orders attempting to bypass our filters will not be refunded.

If you’re looking for a quick solution to erase your debt or a poor credit score, there is no silver bullet. Not only will CPNs not solve your problems, but you could get in serious trouble with the government. Instead, work on building positive credit the right way using your SSN.

Read more: tradelinesupply.com

Watch Out for These Tradeline Myths

July 12, 2019CreditBy toptierfinancial

The tradeline industry is full of rumors, myths, and inaccuracies. Since we aim to educate consumers on how tradelines work and how the credit system works, we want to dispell some of these common myths about tradelines.

The Equal Credit Opportunity Act prohibits credit discrimination and helps protect authorized users tradelines.

1. Tradelines Are Illegal

Unfortunately, many people immediately discount the idea of using tradelines because they believe the pervasive myth that tradelines are illegal.

The reason this myth exists is that FICO stated in 2008 that the FICO 9 credit score would eliminate the benefits of authorized user tradelines for credit piggybackers by somehow distinguishing between “real” authorized users and those who just want to use AU tradelines to build their credit profile.

However, the Equal Credit Opportunity Act (ECOA) prevents this kind of credit discrimination, and FICO admitted to Congress that this action would illegally violate ECOA. Thus, FICO was forced to reverse its decision.

It seems that many people assumed that since the issue of tradelines went all the way to Congress, they must have been banned, but that is not the case. To the contrary, Congress actually protected the ability of consumers to use authorized user tradelines.

As further evidence that tradelines are legal, the banks themselves actually promote the practice of becoming an authorized user for the specific purpose of boosting your credit score.

2. Tradelines Don’t Work Anymore

This is another myth that arose out of the FICO controversy in 2008. Since FICO claimed that their new credit scoring model would be able to differentiate between traditional authorized users and those trying to “game the system,” many people assumed that this meant AU tradelines wouldn’t work anymore.

However, as we discussed above, FICO was not legally able to go through with this plan, which means anyone can still take advantage of the benefits of user tradelines.

ECOA protects authorized users from being discriminated against, so AU tradelines are here to stay.

Plus, even if FICO does manage to come out with a score designed to punish piggybackers in the future, it will likely take years or even decades for lenders to start using the new score.

If you are not convinced that tradelines still work, we recommend reading our article, “Do Tradelines Still Work in 2019?”

3. Tradelines Are Unethical

Some people think that it is unethical to buy or sell tradelines because they believe that people who buy tradelines are artificially boosting their credit score and can therefore obtain credit that they are not really qualified for.

Firstly, is it unethical to try to boost one’s credit score using legally allowable methods?

People take actions to boost their credit scores every day, such as asking for credit limit increases, taking out new loans to establish more lines of credit, asking their banks to forgive late payments, paying down credit card balances multiple times a month to keep the utilization low, just to name a few.

Becoming an authorized user for the purpose of building credit is just one of many common methods that people use to try to improve their credit.

You have probably even tried several of these techniques yourself. Therefore, it seems that the majority of people do not believe that it is unethical to manipulate credit scores within the legal limits of the law.

In addition, studies have shown that about a third of people have authorized user accounts in their credit profiles and that those authorized user accounts tend to be superior tradelines to the primary accounts in their own name, which means about a third of people are already benefiting from credit piggybacking.

However, minorities have fewer authorized user accounts and benefited less from them compared to whites.

Creating a marketplace where affordable tradelines can be bought and sold helps to create more equal credit opportunity for those who have historically been disadvantaged by an unfair system.

Read “The Ethics of Tradelines” for an extended discussion on this topic.

4. Tradelines Are Expensive

One of the common complaints about tradelines is that they are expensive. Historically, tradelines were only available to the wealthy and privileged due to their high cost.

That may still be true for a lot of tradeline companies, but Tradeline Supply Company, LLC has been a leader in revolutionizing the tradeline industry and making tradelines affordable for everyone.

Our fully automated online platform allows us to keep costs down and provide fairly priced tradelines to consumers.

Our tradelines range in price from as low as $150 to around $1500. Our inventory of thousands of tradelines means virtually everyone can find tradelines that fit their needs as well as their budget.

We have also helped contribute to lower pricing in the industry as a whole. Other companies have started to follow our lead and lower their prices to stay competitive.

All of this means that tradelines are now more affordable than ever.

5. Primary Tradelines Are Better Than Authorized User Tradelines

People often assume that primary tradelines are superior to authorized user tradelines. They think that since authorized users are not held financially responsible for a credit account, primary tradelines must be more powerful, but this belief is somewhat misguided.

When it comes to building credit, the ultimate goal is to open your own primary accounts and maintain a positive history on those accounts, so in this sense, primary tradelines are the priority.

However, when it comes to buying tradelines, trying to buy a primary tradeline is generally not a good idea. Firstly, the primary tradeline industry is full of scams and questionable practices, some of which may even be illegal.

If you think about it, it doesn’t really make sense to try to “buy” a credit account that, by definition, is supposed to have been issued to you by the creditor. If the account was not issued to you, that means someone else had to have opened that account in their name at some point, so how does it then become your primary tradeline?

Secondly, purchasing a primary tradeline may not even help achieve your goals as much as you might think. A legitimate primary tradeline will have no age and no payment history associated with it and will probably have a low limit as well.

In contrast, you can legitimately purchase authorized user tradelines that have lots of age and perfect payment history in addition to high credit limits.

Which option do you think would be better for your credit: the brand-new account with a low limit, or a seasoned AU tradeline with a high limit? In general, the seasoned authorized user tradeline is going to be the better choice.

6. Tradelines Are an Alternative to Credit Repair

While tradelines and credit repair are often used together, they are not the same thing, and it’s important to understand the difference.

An easy way to think about the distinction between tradelines and credit repair is that tradelines add positive information to your credit report, while credit repair removes inaccurate information from your credit report.

If your credit report has damaging errors on it that are lowering your score, any tradelines you add will be limited in their power. For this reason, you may want to undergo credit repair before or in tandem with tradelines.

Similarly, tradelines should not be used as a substitute for credit repair. While they can help to balance out derogatory accounts, this is not the same thing as cleaning up errors in your credit report.

The best results for your credit can be obtained by using both credit repair and tradelines together.

7. Authorized User Tradelines Do Not Count for Mortgages or Auto Loans

For the majority of the most common mortgages, there is no minimum tradeline requirement.

We do not advertise our tradelines saying if you buy our tradelines you can then qualify for a mortgage or auto loan. However, we have done some research and we have found that for the majority of the most common mortgages (most conventional, FHA, and VA loans) there is no minimum tradeline requirement in order to qualify for those loans.

In other words, someone can have zero tradelines and could still potentially be qualified to buy a house. The main factors will typically be the debt-to-income ratio, loan-to-value ratio, and credit score.

Fannie Mae typically updates their underwriting guidelines in regards to authorized user tradelines on their website.

We have heard there are similar guidelines for auto loans as well. Again, we are not claiming that buying tradelines can help someone buy houses or cars, but we are simply addressing this common myth.

8. I Can’t Get Tradelines That Were Opened Before My 18th Birthday

Some people believe that you cannot or should not buy tradelines that were opened before you turned 18 years old. The theory seems to be that it would look suspicious if you were to have an authorized user tradeline while under the age of 18, so somehow the tradeline wouldn’t count toward your credit history.

Contrary to this myth, you do not have to buy tradelines that were opened after your 18th birthday.

In reality, there are many examples to show that this is not true. Parents often add their children as authorized users of their credit cards well before age 18, whether they allow their children to actually use the credit cards or they just want to help their children build a credit history from a young age.

Imagine this hypothetical example: let’s say you are 16 years old. Your father has a credit card that has been open for 20 years. He wants you to be able to use the credit card in case of emergencies, so he adds you as an authorized user to his 20-year-old account. In this case, the tradeline actually extends back to before you were born, but that does not prohibit you from being an authorized user on the account.

Of course, there may be exceptions to this rule, since different banks may have different policies as to the minimum age of authorized users.

However, if you are over the age of 18 and buying tradelines, it should not matter how old the tradeline is.

9. Tradelines Are Only a Temporary Solution

Although tradelines usually only report as open for two months, they remain on your credit report as part of your permanent credit history.

While it is true that a tradeline will typically only report as an open account on your credit report for two reporting cycles, this does not mean that tradelines are only a temporary solution.

Once you are removed from the tradeline, the account will then show as closed, and the closed account will remain on your credit report as part of your permanent credit history for as long as the bank continues to report it.

Although closed accounts are assumed to weigh less on your credit score than open accounts, since the closed tradeline is still a part of your credit history, it will likely still factor into your credit score.

10. The Credit Limit Is More Important Than Age

Between the two most important factors to consider when choosing a tradeline, age and credit limit, we usually recommend prioritizing getting as much age as possible, because age is the most powerful factor of a tradeline. Of course, this depends on what your goals are, but in most cases, age is more valuable than the credit limit.

This is because age goes hand-in-hand with payment history, together making up 50% of a credit score. When it comes to the length of your credit history, more is always better.

11. Buying a Tradeline Guarantees a Score Increase

Those looking to improve their credit score sometimes mistakenly assume that they can go out and buy any tradeline and get a guaranteed credit score boost. This is a dangerous myth because if buyers are not educated and choose the wrong tradeline for their specific credit situation, buying a tradeline could actually backfire and hurt their credit.

To make sure you don’t fall into this trap, we recommend reading “How to Choose a Tradeline,” “Common Mistakes Made When Buying Tradelines,” and “The #1 Secret on How to Unlock the Power of Tradelines.”

Read more: tradelinesupply.com

What’s the “Right” Number of Credit Cards?

July 11, 2019CreditBy toptierfinancial

How many times have you read a blog or heard some financial “guru” opining as to the mystical “right” number of credit cards to have in your wallet? Is the right number one, or two, or three? And what is the criteria for considering what is the right number versus the wrong number?

I’ll let you in on a little secret, there is no right or wrong number. It’s just an excuse to write a blog. If you are comfortable with one credit card, then one is the right number for you. If you need four to operate efficiently, then four is your right number. If you hate credit cards, then maybe zero is your right number.

When considering the right or wrong number of credit cards, nobody ever seems to focus on credit scores as part of their consideration. Well, that’s exactly what I’m going to do. And the reason I’m going to do so is because from a credit scoring perspective there actually is a right number of credit cards.

The Revolving Utilization Ratio

There is a metric in credit scoring systems called revolving utilization. Revolving utilization, often referred to as the balance-to-limit ratio, is the relationship between your credit card balances and your credit card limits, expressed as a percentage.

The ratio is calculated by dividing the aggregate of your balances by the aggregate of your credit limits, thus yielding a percentage. The higher that percentage, the fewer credit score points you’re going to earn from that metric. The lower that percentage, the more points you’re going to earn.

Reports about the optimal percentage are all over the place, with many of them being wrong. For FICO the optimal percentage is actually 1%, which is next to impossible to pull off. So, we have to go to the average percentage for the people with the highest average FICO scores, those with 750 and above. For those folks the average utilization ratio is 7%. For VantageScore the optimal percentage is anything less than 30%.

Now, that doesn’t mean you have to have 7% or 30% in order to have solid credit scores. You’ll just need to hit those targets if you want the highest possible scores, something that’s infinitely important right before you apply for a loan.

Let’s go back to the topic of this blog, which is the right number of credit cards. The right number for you is going to be the number of cards necessary for you to maintain 7% utilization relative to your normal credit card spending patterns. That way you don’t really have to worry about your credit scores, ever. If you can hit 7%, or close to it, on a monthly basis then you’ll do as well as possible under both credit scoring platforms.

What you need to do now is download your credit card statements from the last 12 months. Add up the balances from all of the statements, and divide that number by 12. That will give you your average monthly amount of credit card debt appearing on your credit reports. Let’s say, for illustration purposes, your average monthly balance from all of your cards is $5,000.

Now we just need to figure out what credit limits you need from all of your cards in order for $5,000 to represent 7% of the aggregate credit limit. I’ll do the math for you…you’re going to need about $70,000 of credit limits for $5,000 to represent 7% of the limit because $5,000 divided by $70,000 equals 7.1%.

$70,000 sounds like a really large number, but in the world of credit card credit limits, it’s actually not that big of a number. In fact, if you have two credit cards each with limits of $35,000, you’re already there. For many of you, however, you’re going to need more than two cards.

This becomes the answer to your question about the right number of cards. If it takes six credit cards for your average monthly credit card balances to equal about 7%, then six cards is the right number for you. If it takes ten cards, or 13 cards, or three cards…then those are the right numbers for you.

John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group and the author of four books about consumer credit. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has 27+ years of experience in the consumer credit industry, has served as a credit expert witness in more than 370 lawsuits, and has been qualified to testify in both Federal and State courts on the topic of consumer credit. John serves as a guest lecturer at The University of Georgia and Emory University’s School of Law.

Disclaimer: The views and opinions expressed in this article are those of the author John Ulzheimer and do not necessarily reflect the official policy or position of Tradeline Supply Company, LLC.

Read more: tradelinesupply.com

What Is the Difference Between Individual and Overall Utilization?

June 27, 2019CreditBy toptierfinancial

What is the difference between your overall credit utilization ratio and individual utilization ratios and why does it matter to your credit? Keep reading to find out.

Credit utilization makes up 30% of a FICO score.

What Is Credit Utilization?

To put it simply, credit utilization is the amount of debt you owe compared to the amount of your available credit. In other words, it is the amount of your available credit that you are actually using.

In terms of your credit score, credit utilization makes up 30% of your score, second only to payment history.

The reason credit utilization is such an important part of your credit score is that the ratio of debt someone has is highly indicative of whether they will default on a debt in the future. The more you owe, the harder it becomes to pay off all that debt on time every month, which makes you a riskier bet for lenders.

Components of Credit Utilization

According to FICO, there are several components that fall within the category of credit utilization, such as:

The total amount you owe on all accounts (overall utilization)

The amount you owe on different types of accounts

The utilization ratios of each of your revolving credit accounts (individual utilization)

The number or ratio of your accounts that have high balances

The amount of debt you still owe on your installment loans (e.g. mortgages, auto loans, student loans)

What Is the Difference Between Overall and Individual Utilization?

Your overall utilization ratio is the amount of revolving debt you have divided by your total available revolving credit.

For example, if you have one credit card with a $450 balance and a $500 limit and a second credit card with a $550 balance and a $3,500 limit, your overall utilization ratio would be 25% ($1,000 owed divided by $4,000 available credit).

However, the individual utilization ratios of your respective credit cards are 90% ($450 balance / $500 credit limit) and 16% ($550 balance / $3,500 credit limit).

Since credit scores consider individual utilization ratios, not just overall utilization, having any single revolving account at 90% utilization is going to weigh negatively on the credit utilization portion of your score.

Overall Utilization May Not Be as Important as You Think

Typically, when people think of the effect that credit utilization has on credit scores, they often assume that overall utilization is the most important variable.

By this assumption, it would be fine to have individual accounts that are maxed out as long as the overall utilization is still low.

Individual utilization ratios may be more important than the overall utilization ratio.

However, we have seen that this is not always true.

For example, sometimes clients with maxed-out credit cards will buy high-limit tradelines in order to reduce their overall utilization ratio, but then they don’t see the results they were hoping for.

This means that the individual accounts with high utilization are still weighing heavily on the clients’ credit scores, despite the fact that they have improved their overall utilization. In other words, the decrease in the overall utilization ratio did not make much of a difference.

Cases like this seem to indicate that overall utilization may not play as big a role as traditional wisdom has led us to believe and that the individual utilization ratios may be more important.

This is one of the reasons why we typically suggest that consumers focus on the age of a tradeline rather than the credit limit. Although people tend to gravitate toward high-limit tradelines, the age of a tradeline is actually more powerful in most cases, especially considering that lowering one’s overall utilization ratio may not help very much.

How Do Tradelines Affect Credit Utilization?

Although the age of a tradeline is often its most valuable asset, tradelines can still help with some of the credit utilization variables.

Since our tradelines are guaranteed to have utilization ratios that are at or below 15%, this means that at least 85% of that tradeline’s credit limit is going toward your available credit, which helps to lower your overall utilization ratio.

Buying tradelines also allows you to add accounts with low individual utilization to your credit file, which can help to improve the number of accounts that are low-utilization vs. high-utilization.

Tips to Keep Your Credit Utilization Low

Spead out your charges between different cards

Since we have seen that it’s important to keep individual utilization ratios low, one strategy to accomplish this is to make charges on a few different credit cards instead of charging everything to one card. Spreading out your charges prevents an excessively high balance from accumulating on any one individual card.

If you spend a lot on one of your cards, consider spreading out your charges between different cards or paying down the balance more often.

Pay off your balances more frequently

If you do spend a lot on one card, it helps to pay off your balance more than once a month. If your card reports to the credit bureaus before you have paid off your balance, it will show a higher utilization than if you had paid some or all of the balance down already.

You can either time your payment to post just before the reporting date of your card or you can make payments several times per month. Some people even prefer to pay off each charge immediately so their card never shows a significant balance.

Set up balance alerts to monitor your spending

To prevent mindless spending from getting out of control, try setting up balance alerts on your credit card. Your bank will automatically notify you when the balance exceeds an amount of your choosing, so you can back off of spending on that card or pay down your balance.

Don’t close old accounts

Even if you don’t use some of your old credit cards anymore, it’s often a good idea to keep the accounts open so they can continue to play a positive role in your overall utilization ratio and the number of accounts that have low utilization vs. high utilization.

Ask for credit limit increases

Another way to decrease your utilization ratios is to call your credit card issuers and ask them to increase your credit limit. By increasing your amount of available credit, you decrease your utilization ratio, both on individual cards and overall.

Keep in mind that your bank may do a hard pull on your credit to decide whether or not to grant your request, which could ding your score a few points temporarily. However, the small negative impact of the inquiry could be offset by the benefit of the credit line increase.

Also, this might not be an ideal strategy if you think you will be tempted to use the new credit available to you.

Open a new credit card

Like asking for a higher credit limit, opening a new credit card can also lower your credit utilization, provided you leave most of the credit available.

Again, this will add an inquiry to your credit report, as well as decrease your average age of accounts, so this could have a negative impact on your score temporarily, which may be outweighed by the decrease in your credit utilization.

Read more: tradelinesupply.com

Credit Expert: Can Authorized User Tradelines Build Credit?

June 23, 2019CreditBy toptierfinancial

In 2009 the U.S. Congress passed, and President Obama signed into law, the Credit Card Accountability, Responsibility, and Disclosure Act of 2009. This law, which is more commonly referred to as the CARD Act, restricts credit card issuers from extending credit to consumers who are under 21 years of age, except under limited conditions. The impact of the CARD Act, among other things, has made it harder for young people to build credit reports and establish credit scores.

Some experts suggest getting a co-signer to build credit, but an authorized user account may be a better option.

This is just one example of the difficulties various segments of our population endure when they are trying to build or rebuild their credit reports. Certainly people over 21 who have experienced their own credit disasters have their own unique hurdles with which to deal when trying to build or rebuild their credit reports.

It’s not uncommon for financial experts to advise consumers to look for co-signers, open secured credit cards, or take out credit-builder loans as various strategies to build or rebuild their credit. All of these credit-building strategies have their own respective pros and cons. Some work better than others, some work faster than others, and some are just bad ideas.

The “Authorized User Strategy”

One common method for building credit reports and credit scores is to become an authorized user on a credit card account that belongs to another consumer. The way it works is fairly simple. The primary cardholder adds the new consumer’s personal information to their account and “authorizes” them to use the credit line. The newly added authorized user has the same permissions to use the card as the primary cardholder but has no liability for the debt. Think of it as a credit card but with training wheels.

Most credit card issuers will then report the history of the credit card account to the authorized user’s credit reports at Equifax, Experian, and TransUnion. The addition of the credit card helps to build or rebuild the credit reports of the authorized user.

The Impact of Authorized User Tradelines on Credit Scores

Credit scoring systems, such as those built by FICO and VantageScore Solutions, will consider the newly added credit card account the next time the authorized user’s score/s are calculated. And, if the credit card account has been managed properly, it can certainly help to improve the consumer’s scores almost immediately.

To the extent you are thinking of becoming an authorized user on the credit card of another person, you should first learn a little bit about the card and how it has been managed. You’re going to want to find out the age of the card, and the older it is the better it will be for your credit scores.

You’re going to want to find out the credit limit of the card and also its average monthly balance. This is important because credit scoring models will penalize you if the balance represents too much of the credit limit. This is formally referred to as the card’s “revolving utilization ratio” and it is calculated by dividing the card’s balance by the card’s limit, as they appear on your credit reports. The lower the ratio, the better for your scores.

And finally, it should go without saying that you’re going to want to ensure the card has always been paid on time and there is no record of late payments associated with the account. Late payments, of course, are not good for your credit scores.

In the perfect scenario, you’d like to become an authorized user on a card that is decades old, has a very high credit limit, a low balance, and has always been paid on time. This the optimal account to have on your credit reports and it is a fantastic way to build your credit reports and credit scores.

Disclaimer: The views and opinions expressed in this article are those of the author John Ulzheimer and do not necessarily reflect the official policy or position of Tradeline Supply Company.

Read more: tradelinesupply.com

Business Credit Starts With Personal Tradelines

June 21, 2019CreditBy toptierfinancial

Many people dream of starting their own business one day, but not everyone can fund their business ventures with their own savings. Most entrepreneurs will probably want to apply for business credit at some point.

If you are interested in building business credit, our article breaks the difference between business credit and personal credit, what business tradelines are, and how to build business credit.

What Is Business Credit?

Building business credit is similar to building personal credit, but it’s actually a completely separate system. Just as individuals have personal credit scores that are meant to represent their creditworthiness, businesses have business credit scores to represent the company’s creditworthiness.

Why Do You Need Good Business Credit?

Good business credit shows that your business has been reliable in paying creditors, which indicates that it is a good candidate to loan money to or do business with.

Establishing business credit is essential if you ever want to be able to make purchases from vendors on credit or open a business line of credit to help support your company. Virtually all business will likely want the option of using credit at some point.

What Is a Business Credit Score?

Business credit scores, however, are determined by the major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. Each bureau has a different way of collecting information and determining your business credit score. FICO also offers a credit scoring service for small businesses.

Dun & Bradstreet generates a Paydex score, which rates the creditworthiness of businesses on a scale from 1 to 100, 100 being the best score. The D&B Paydex score is entirely based on payment history. Similar to a personal credit score, it helps creditors decide whether to loan money to a business and what the terms of the loan should be.

Interestingly, an on-time payment history does not earn a perfect Paydex score. To get a business credit rating of 100, a business must consistently pay creditors 30 days in advance of the due date. Merely paying on time will only result in a credit score of 80.
In addition, the Paydex business credit score is weighted by dollar amount, so larger accounts could impact your score more than smaller accounts.

Equifax has three different credit scores for businesses.

Business credit reports may include information beyond just credit accounts, such as legal filings and public records.

The business payment index is similar to the Paydex score. It ranges from zero to 100 based on whether payments were made on time.
The business credit risk score is intended to predict the likelihood that a business will become seriously delinquent on payments. Scores can range from 101 to 992.
The business failure score aims to predict the probability of a business closing within 12 months. The score ranges from 1,000 to 1,610 with a lower score indicating that the business seems more likely to fail within 12 months. With both the business credit risk score and the business failure score, a score of 0 corresponds to bankruptcy.

Experian provides a business CreditScore report that includes a credit score for businesses in addition to other relevant information such as public records and account histories. The Intelliscore, Experian’s business credit score, ranges from 0 to 100, but it is different from the D&B Paydex score because it takes into account other factors besides just payment history.
FICO’s Small Business Scoring ServiceSM ranges from 0 to 300 and is used by the Small Business Association in evaluating credit decisions. FICO’s small business credit score may actually include information from the principal borrower’s personal credit report, so your personal credit could have an impact on your small business credit score.

Business credit reports aren’t free, so if you want a business credit check, you will have to pay the bureau providing the business credit report.

How to Build Business Credit

To build up a Paydex credit score, a business needs to obtain a DUNS number from Dun & Bradstreet and establish a payment record with at least four vendors, according to NerdWallet. Since the Paydex score is solely based on how quickly businesses pay their debts, you’ll want to pay your suppliers ahead of schedule to build your Paydex business credit score.

Building business credit is much like building personal credit, although business credit has a different reporting system.

In establishing business credit, as with personal credit, the most important factor is maintaining a good credit history. However, business credit reports can often take into account additional information, such as legal filings, public records, and the age and size of your company.

Things that can hurt your business credit score include:

Slow or late repayment of debt
Missed payments
Judgments, collections, or liens on your business
Outstanding balances/high credit utilization
Not enough years of being in business

Just like personal credit reports, business credit reports can and often do contain errors. it is important to regularly check your business credit report for errors that could be damaging your score.

What Are Business Tradelines?

To get business funding, you will typically need to have solid revenue and strong personal credit, not just business tradelines.

Business tradelines are all of the credit accounts belonging to your business. Examples of business credit tradelines include business lines of credit, business loans, business credit cards, and credit accounts with individual suppliers.

Those hoping to get business credit to start or expand their own businesses may seek out business tradelines for sale to help them build their business credit rating. However, similar to buying primary tradelines, trying to buy tradelines for business credit might not be a good idea for several reasons.

Firstly, business tradelines don’t always report to the credit bureaus. Many business tradelines are not necessarily loans or credit cards, but accounts with individual vendors that allow you a certain period of time to pay your bills. Not all vendors report payment activity, so many times businesses are required to pay Dun & Bradstreet a monthly fee to verify their credit history.

In addition, getting business credit usually depends more on having strong personal credit and a healthy business revenue than having a certain number of business tradelines on file.

How to Get Business Credit

While Tradeline Supply Company, LLC does not assist with tradelines for business credit or business funding, we can share some general information on the subject.

Generally, one of the most important factors in getting business credit is to be a personal guarantor, especially for a newer business that does not have much credit history. As a personal guarantor, it is essential to have excellent personal credit.

Business lenders will likely check your personal credit even if you are not serving as a guarantor.

Even if you are not a personal guarantor, often lenders will still check your personal credit when you are applying for business funding. So while business credit may be the long-term goal, the way to achieve this goal is to first build and maintain your own outstanding credit report.

Therefore, one of the best steps you can take toward establishing business credit is building up your own credit history with high-quality tradelines so you can serve as a personal guarantor for your business. Seasoned authorized user tradelines are a great way to quickly add years of perfect payment history to your credit file. See our updated list of available tradelines now.

Read more: tradelinesupply.com

Tradelines in 5 Easy Steps

June 16, 2019CreditBy toptierfinancial

While the credit system is definitely complicated, buying tradelines doesn’t have to be. Just keep a few basic principles in mind and follow these five steps to make buying tradelines easy!

Here are the five easy steps that we’ll break down in this article:

Understand your credit profile
Determine your goals
Choose tradelines that fit your credit profile and align with your goals
Order your tradelines
Wait for your tradelines to post!

1. Understand your credit profile

Understanding your credit file is the foundation of improving your credit. If you don’t know what’s in your file and blindly move ahead with tradelines and/or credit repair, you could easily make a mistake that could hurt your credit more than it helps.

Your credit report shows a list of all of your tradelines, and how you manage these tradelines is reflected in your credit score.

We’ve written about everything you need to know about credit scores previously, but to summarize, these are the main factors that affect your credit score:

Payment history: 35%
Utilization (how much you owe): 30%
Length of credit history: 15%
Credit mix: 10%
New credit: 10%

Before buying any tradelines, you’ll want to take a good look at your credit profile on CreditKarma.com (or order one of your three free credit reports allowed each year from annualcreditreport.com) and make sure everything is accurate and up to date.

You can get an overview of your credit profile for free on CreditKarma.com.

If there is inaccurate information in your credit profile, you may want to look into credit repair in addition to tradelines.

Examine each of your credit accounts and try to understand how it may be affecting your credit score, whether positively or negatively.

This foundational step will allow you to form a clear picture of your unique credit situation so you can choose the smartest path to move forward.

2. Determine your goals

Consider these five main factors that affect your credit score when setting your goals.

Now that you are aware of what is in your credit profile, ask yourself what variables could be improved and which strategies would be a good investment of your time, effort, and money.

For example, if you have a blemished payment history that is bringing down your score, you could balance that out by adding as much positive payment history as possible with a seasoned tradeline.

If your credit age is not old enough, you may want to increase the age of your oldest account and your average age of accounts by adding a tradeline with a lot of age.

Perhaps you have a thin file or your credit mix is unbalanced, and you just want to add more tradelines to your credit file.

These are just a few examples of common goals that people often have when they are looking to add tradelines to their credit report. Make sure your goals are personalized to your unique credit situation.

3. Choose tradelines that fit your credit profile and align with your goals

Choosing the correct tradeline tends to be the trickiest part of this process. However, there are really only two main variables that you need to consider when selecting tradelines: the age of the card and the credit limit.

The tricky part is that people often incorrectly assume that they should just get the highest credit limit. In reality, this approach could actually backfire and hurt your credit, because the age of the tradeline is much more important in the vast majority of cases.

However, the credit limit does still come into play if utilization is a factor you are concerned about.

To account for both credit age and utilization, you’ll want to calculate your own average age of accounts and overall utilization ratio using our custom Tradeline Calculator. Simply input the numbers from your credit profile and the calculator will do the work for you.

Use our Tradeline Calculator to calculate your average age of accounts and utilization ratio.

Then, try plugging in information from some of the tradelines you are interested in purchasing and see how the numbers change. To get the maximum benefit from tradelines, you want to see the average age of accounts jump up at least to the next age level.

Based on our research, we estimate that the age levels to shoot for are 2 years, 5 years, 8 years, 10 years, and 20 years. So if your average age of accounts is 3 years, for example, it is probably a good idea to buy a tradeline that will boost that average to at least 5 years.

It’s important to fully think through your decision instead of just buying a tradeline that “seems” like a good choice.

For more guidance on choosing the best tradelines for your goals, we strongly encourage you to read “How to Choose a Tradeline” and “Common Mistakes Made When Buying Tradelines.”

4. Order your tradelines

Add tradelines to your cart and checkout on our secure site.

Once you have identified the best tradelines for you, simply add them to your cart and check out on our secure website!

To ensure that all goes smoothly with your purchase and that your tradelines post as guaranteed, you need to make sure you do not have any credit freezes or fraud alerts with any of the credit bureaus.

These actions block access to your credit report, so no new tradelines can be added. If you do have a credit freeze or fraud alert, contact each credit bureau to remove it before purchasing tradelines.

For detailed instructions on how to place a tradeline order, see “How to Purchase Tradelines and What to Expect.”

5. Wait for your tradelines to post!

The last step is the easiest of all: sit back and wait for your tradelines to post! Once you receive your confirmation email, simply wait until the last day of each tradeline’s reporting period and then check to verify that the tradelines have posted.

Then, celebrate your new tradelines on social media! Don’t forget to tag us @tradelinesupply and use #tradelinesupply so we can find your post!

Share this image on social media and tag us when your tradelines post!

The banks and credit bureaus sometimes have errors in their reporting, so, unfortunately, there is a small chance that a non-posting could occur. However, if a tradeline does not post to at least any two out of the three credit bureaus, we will provide a refund or exchange for that tradeline. Simply follow the instructions detailed in “Report a Non-Posting” to submit your refund request.

6. Extra credit: Become a tradeline expert using the resources in our Knowledge Center!

The more you learn about tradelines, the more informed you will be when it’s time to buy. Those who are educated on the credit system and how tradelines work are in the best position to maximize their results from tradelines.

Check out our extensive library of tradeline resources in our Knowledge Center to become a tradeline expert and a highly informed buyer.

Read more: tradelinesupply.com

How to Increase Your Credit Limit

How to Get an 850 Credit Score

What Are Credit Scores and How Can Tradelines Help?

What Is a CPN?

Watch Out for These Tradeline Myths

What’s the “Right” Number of Credit Cards?

What Is the Difference Between Individual and Overall Utilization?

Credit Expert: Can Authorized User Tradelines Build Credit?

Business Credit Starts With Personal Tradelines

Tradelines in 5 Easy Steps

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