The Truth About Credit Tradelines w/ Will Roundtree

the truth about Trane longings peace family will Roundtree here your credit expert author of the book credit is king president and founder of weed management services president and co-founder of easy funding but more importantly just wanted to come and drop some knowledge with you and share some important information about credit see there's so many misconceptions so many myths what's true what's not true and things that we just have not been taught about credit and probably one of the most common things that a lot of people really just don't understand is the truth about trade lines so you may be asking yourself what our trade lines are you may be saying I've heard of trade lines not quite sure what it is or you may have heard the term authorized users or you know one of the old-school mortgage terms piggybacking but essentially what it is it's where you're going to be renting someone's payment history let me explain how that works so let's say you have someone who doesn't have a really you know thick credit profile meaning they have very little to no credit you know and so let's say you have a family member or relative who does have good credit in a form of revolving credit cards so essentially with that person with a great credit or who has credit cards would do would pick up the phone contact their bank and add them add you on as an authorized user essentially meaning that whatever reporting history that coincides with that particular credit card or that credit line is now going to be reporting on your credit profile and so what that looks like is is let's say you have a credit card or the person who's who you're asking to add you on as an authorized user has a Visa credit card $10,000 credit limit and that's five years old okay so they're gonna pick up there they're gonna pick up the telephone call the bank and add you on as an authorized user now an authorized user essentially means that they authorize you to have access to this credit line C or the terminology trade line okay and essentially a trade line is just any line of credit that's reporting on your credit report so it's more like industry jargon okay so now that visa credit card remember it's ten thousand dollar limit it's a five-year-old car they're going to pick up the phone contact that Bank or that servicer or that credit card company and this only pertains to credit cards okay they pick up the phone call them and add you on as an authorized user there's typically a few pieces of information they're going to need to provide they're going to need to provide your name some banks are going to ask for your date of birth some may ask for your social not all but the most important component is they're going to ask for your address and that is because banks credit card companies credit bureaus usually authenticate you by two pieces of information your name and address so if they do not ask for your social don't be alarmed that just means that that is not one of the particular protocol that they need in order to add you to that particular credit card so they're gonna pick up the phone as I mentioned earlier call the bank add you on provide this information and then on the statement date and if you don't know what that means every single credit card has a statement date and it's usually a few days after the actual due date and what does that look like so let's say this credit card due date was the 15th of the month usually the statement date is a few days after that so typically let's just say to 18th of the month will be the statement date and what that means or why that's so important is is once they add you to this credit line usually after the statement date approximately sometime around there once they update the information to the credit bureaus and that's what the statement date means that means when they push the information to the credit bureaus then you will then see this credit line this credit card reporting on your credit report okay so now why is this important to know so there's a couple different reasons why it you know trade lines could be beneficial the reason I've talked about the truth about trade lines because it doesn't help in every single situation and I'll give you an example okay so now let's say you have someone who has challenged credit you have a 500 credit score you have ten collection accounts all right maybe a public record and in few late payments you know five late payments okay now typically someone in this boat may be going through some type of credit repair or credit restoration and that's okay okay so now one of the biggest mistakes I see a lot of people make is they'll go and add tradeline on their credit profile at the beginning stages of the credit repair now the reason it's important to understand why that's the wrong time to do so typically if you're going to find a trade line in a lot of times people are buying trade lines on the open market meaning they're going to a third-party company and they're actually paying for this now if you can have someone add you to their trade line at zero cost that's fine because they can keep you on infinitely but if you're gonna go and invest and pay for this particular trade line that's ten thousand dollars in five years because then what's gonna report when your credit report is an authorized curt trade line that's ten thousand dollars in five years so again this information can help your credit profile but if you go and pay for that typically someone who is selling their trade lines generally is only going to keep you on thirty to forty five days so now if their average credit repair cycle meaning how long it takes you to go through credit repair can be anywhere from four to let's say twelve months and that depends on the severity of your credit I mean we've had some clients who've gotten their credit repaired in forty five days but you know every single scenario is going to be completely different but going back to this situation you have a 500 credit score you have ten collection accounts a few public records and some late payments you go and pay for an authorized user or a trade line that is commonly referred to we know it's only going to be on your 30 to 45 days we know the average credit repair life cycle is four to twelve months if you pay for it month one what's going to happen in month in month two or three exactly that trade line now becomes irrelevant because you've just basically wasted your money for something that's going to be on there short time so if you're going to pay or invest in a trade line I recommend that you only add it at the end of the credit repair cycle and again this is a very common mistake that I see a lot of people make you want to make sure that if you're going to invest your money that you invest it properly or you get the proper information because adding trade lines is merely just a strategy okay it's not the end-all be-all it doesn't mean your credit is going to be perfect forever and it may not even help you in this particular situation and I'll explain why okay so now we are do you identify this person has a 500 credit score they had you know 10 collection accounts some public records few late payments now 30 percent of our credit score is based off of credit utilization okay or credit usage so let's say this person who had the 500 credit score had $1000 credit card and they had a zero balance which means they never really even used this credit card but they went in invested in that $10,000 trade line that was five years old guess what that trail on it did nothing for their credit score whatsoever because the trade line is only to help to lower the credit utilization but the utilization is only based upon revolving credit cards now let's take this back a little bit what is a revolving credit card etc so there's two different types of credit you have what's called revolving credit and then you have installment okay so installment would be credit cards or department store cards excuse me revolving would be credit cards or department store cards installment credit would be something like your mortgage your auto loan if you have student loans anything with a fixed payment revolving would be anything with a revolving payment so just like going back with the credit card it doesn't keep the same balance as you pay in to excuse me it doesn't have the same payment dollar amount as you pay into the balance and so your credit utilization is only based off of revolving credit an authorized user or a trade line only affects your revolving credit and so if you have a credit card that's a thousand dollars but you have a zero balance adding a trade line does not help your score so I hope you guys are following me it does not help your score because you already have a zero balance yet so which means you have a zero percent credit utilization now let's take the same situation same scenario and you had that thousand dollar credit card but this time you have a $900 balance which then puts you at what 90 percent credit utilization so now adding the trade line in this particular situation could be beneficial because if you go you have the ten thousand dollar credit card which you now add to the thousand dollar credit limit that you already currently have which gives you a new limit of eleven thousand dollars now keep in mind you still have the nine hundred dollar balance which in turn that now takes your ninety percent credit utilization down to let's just say eight point five percent so now that in turn will increase your credit score because as we identify earlier that your credit usage makes up 30% of your score which happens to be the second largest component of what makes up our credit score now so kind of recapping a trade line or an authorized user with every term whatever terminology you want to use can only benefit you if you have a high credit utilization if you have a low credit utilization 0% usage on that thousand dollar credit card adding this $10,000 limit does not help your credit score now another caveat in in lieu of this whole particulars situation remember this person had the five hundred credit score they have the ten collection accounts they had the public record now they can still go out and improve their credit utilization but keep in mind if they still have the 10 negative accounts the ten collections the five late payments they have the public record reporting remember unless we identify all of the the the challenges that is affecting that credit score just adding trade lines does not help you on on an overall basis to improve your overall credit score nor your overall credit profile so the reason I wanted to point that out is because I see a lot of times people trying to as I say put lipstick on a pig it's still a pig and so essentially that's what we're doing with our credit profiles we're adding the lipstick which is the trade lines or the authorized user to the stuff the crappy stuff that's still on there so again just a word of advice if you're gonna go and ask some trade lines or you want through some type of credit restoration process make sure you're still attacking the cancer in the credit report which are the collection accounts the late payments the public record and then at the trade line at the end which is kind of like the cherry on top or the sprinkles on top of the ice cream is gonna give you the finish for your particular credit profile so that's one of the things that I really want to discuss and break down about trade lines and authorized users now let's talk about a couple different scenarios where authorized users at trade lines can be beneficial now did you know you can start building your children's credit as you own your starts in your zone you may ask well how do you do that will by adding trade lines here's how you do it same thing you have a ten thousand dollar credit card you have a zero balance now keep in mind there's a couple caveats in lieu when you are talking about the credit limits or when you're trying to ask someone as a authorized user on a credit card and I'll talk about that shortly so you have a ten thousand dollar credit card with the zero balance the card is five years old you can pick up the phone contact your credit card company your bank or whoever that is we remember it only this is only beneficial for revolving credit cards you can call the bank and add your 13 year old child to that credit line and as long as this card stays in good standing by the time that child turns 18 years old they're gonna have a seven hundred plus credit score as long as this car doesn't get any late payments or maxes out or it goes to collections so this is a really good way for us to start building our children's credit okay this is actually probably the best gift you can give them by the time they graduate high school and get ready for college because credit is just something that we aren't teaching our children this is things that we need to teach now because typically we're do most of us are where have most of us screwed up our credit when we go to college because we haven't been educated you know the pitch you go they give him free pizzas and t-shirts to sign up for a credit card but we don't know how to properly use credit or what the purpose of a credit card is for and so by start building our children's credit at a young age and over the years from 13 to 18 we're just educating them on the power of credit why you want to maintain it etc etc that way by the time you go out into the real world now mommy and daddy doesn't have to co-sign for that first vehicle you know we don't have to co-sign for that first apartment off-campus so we're actually empowering them that's why it's important for us to know this information so that's one of the ways that we can help and how trade lines can be actually used for a benefit by helping our children build our credit or build their credit or another scenario is when I work with a lot of my clients who are going for some business funding and for those who do not know what business funding is that is where you're trying to get some capital for your company maybe you have a start-up you're trying to scale your business you're trying to grow it you need some marketing cost inventory whatever the case may be now the reason understanding the power of trade lines can be important is because there's two major components that banks look for with your credit that it can make a determination whether they're gonna lend you the money or not and that is your age of file and your high credit limit meaning the average age of file that most banks are looking for is five years plus okay the average high credit limits that they're looking for is five thousand-plus okay that means the average of a $5,000 credit card so meaning if you're one of those who say you know I don't believe in credit cards but I want to go and get some funding for my business and your highest credit limit is a thousand bucks you run the risk of possibly not getting much credit and this is all pertaining to your personal credit okay your personal credit has to be strong you have a you have to have a good personal credit profile in order to qualify for some business funding meaning any type of lines of credit for your business any types of business loans any types of business credit cards you have to make sure that your personal credit is in position and so in lieu of that if you don't have the age of file if you don't have the average high credit limit of $5,000 or plus you can add something with the you can add an authorized user or a trade line and I'm gonna be interchanging the terminology because different people call it different things - in order to help you to eclipse that five years of age and the high limit of $5,000 we just talked about you had a family member who has a $10,000 credit card and the card is five years or older so if you become an authorized user on that credit card guess what you now will have a new high-limit of $10,000 reporting on your credit profile and it now has eclipsed and giving you an average age of five years see so that's really just a strategy another form of leverage helping you to to maximize your situation in order to be able to get funding for your business because again your age of file and your average credit limit high credit limit also make a determination with your credit profile or your personal credit score in order for the bank to approve you for any type of business lines of credit any types of business credit cards or anything like that they don't care about your paid x-score your personal credit makes a big big major impact it's probably waited over 90 plus percent that the banks are looking for in your personal credit score and again that age of file and high limits also make a major impact now the last thing I wanted to share is what are some of the potential pitfalls when adding in trade line or an authorized user so now if you take that same person who has that ten thousand dollar credit card in average five years remember because they made you an authorized user now it doesn't mean that and to keep in mind - it doesn't mean that you have to give that person that card or you get access to the car essentially you're just renting the history okay you're just renting to pay the credit history they can remove you at any time or they can keep you on forever it's completely up to them now while renting that history that means anything that's reporting what that particular credit card will also report on your credit so you want to make sure a couple different things now we've already identified earlier that 30% of our credit score is credit usage which means that if they max out their credit card at $10,000 it is also going to impact your credit profile or your credit score so when it comes to an authorized user I have a rule of thumb and say that you want to make sure that their balance is ten percent or less ten percent or less now if someone is gracious enough to add you on as an authorized user and you're trying to to you know you know barter with them on why they should add you one especially if it's a friend family or a good or a friend or family of the of whoever you're talking with I would say you're as they say a fair exchange is not a robbery and so you know and what I mean by that is is that if they do have a high balance why don't you offer to help them pay on the balance in order to get it below 10% that may intrigue them or that may you know want them to want to add you to their credit line so if they do have a car that's over 10% remember you want to get that balance down because anything 30% or higher is going to also impact your credit profile and then you want to make sure they don't get any late payments or 30-day late payments or it goes to collections because if they get a late payment guess who else got a late payment you and so again it's very important to understand that if you're going to go on as an authorized user on someone else's trade line especially if it's a close fan close friend or a relative or a family member offer to help them pay the credit card bill especially if they're going to add you one without charging you a rental fee as I call it okay now if you're going out there on the open market and dealing with a third party company of course you run the risk you want to make sure you're dealing with a reputable company who offers some clean authorized user' credit cards because remember if they're dealing with cards or individuals who max out their credit cards who get 30-day late payments remember that also is going to impact your credit score but no need to worry if that is something that does happen you can always pick up the phone contact the the the credit the credit bureaus excuse me and have them remove that from your credit profile because the good thing about being an authorized user you do not assume responsibility if that car was to go to collections whoever was the borrower would be the one that would be responsible for any debt now if the person who added you on as an authorized user gave you a car of course you want to make sure that if you were the one who were being irresponsible with it that you some kind of way you guys work that out or whatever the case may be but I'm merely just talking in the form of strategy on the truth about trade lines because again I've seen a lot of people waste a lot of money on trade lines hopefully this information was of some value for you hopefully you saw the benefit of how they can be used properly we talked about how it can help your children's credit the reason why you may not want to purchase it at the beginning of your credit repair or credit restoration cycle you want to add it at the end and more importantly when it comes to trying to get some funding for your business how it can actually help you when it comes to getting your average age up and your high credit limits increase to be able to give you a maximum credit strength for the banks to be able to give you a proper underwriting of your credit card application your business line of credit application or your small business loans so again family this is will Roundtree bring you some information about the truth about trade lines and make sure you check out my other videos and I'll see you guys soon peace

Channel: Mr. Will Roundtree

Views: 14,728

Rating: 4.9282298 out of 5

Keywords: How to get the perfect credit score, credit, real estate, education, knowldege, credit repair, how to boost credit score, how to get perfect credit, how to, credit utilization, perfect fico score, how to repair credit, business funding, 850 credit score, 700 credit score, tips and tricks, step by step, credit inquiries, credit history, docusign, dotloop

Id: AWmYKIwbvUg

Length: 21min 16sec (1276 seconds)

Published: Thu Sep 26 2019