Ever wonder how credit agencies seem to know your entire credit history? Bought a home? Had some late credit card payments. Finished paying off those student loans? The credit agency has all that info at its fingertips.
Credit agencies collect credit information on you every time you make a credit transaction. That information, passed on from your lenders to credit reporting agencies, is called a trade line. The trade line is a record of all credit activity for each credit account under your identity.
Trade lines are used by credit reporting agencies to give you, the borrower, a credit score, like a FICO score. Credit scores signal to potential lenders if you have your, um...poop in a group...or not. The lower your credit score, the higher the rates and offers you’ll receive, since you appear to be a greater risk.
Maybe you did a really bad job with that one credit card, paying late on the reg, and you'd like to erase its trade line. You can delete that credit card account...but the trade line for it will still show up on credit agencies’ reports for at least three to five more years.
Better get on that now, then.
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Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
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