How To Make Money Selling Tradelines
When someone with a long history of good credit gives another person access to their credit as an authorized user in exchange for a fee, this is called selling a tradeline. Selling tradelines is legal, but there are potential pitfalls to be aware of, so it's important to do your research and work with a reputable tradelines broker.
What Are Tradelines?
Tradelines are credit accounts that appear on your credit report. If you have a credit card or auto loan, you already have tradelines. When people refer to "selling" tradelines they're actually talking about selling another person temporary access to their good credit in exchange for compensation.
This is also referred to as "piggybacking" on someone else's good credit, which can be an effective way to improve your credit score. In fact, piggybacking credit is a tried and true method for establishing credit or giving your score a boost if you're new to credit or need to repair your credit profile.
The easiest and most affordable way to piggyback credit is to ask a spouse, friend, or relative to add you as an authorized user to their account. However, not everyone has someone like this they can ask, so they might turn to a tradelines broker who can help them purchase seasoned tradelines.
The cost of tradelines varies depending on how seasoned the account is, with some tradelines costing $1,000 or more. While this might seem too expensive to be worthwhile, someone trying to qualify for a home loan could possibly save tens of thousands of dollars in interest with a more favorable credit score.
Are Tradelines Worth It?
For people with good credit, selling access to their tradelines can be a good way to earn passive income. If you've spent years building excellent credit, renting your tradelines through a reputable broker can help you earn extra money with very little effort.
However, selling tradelines is not without risk. Some creditors frown on the practice and will close your account if they believe you're adding authorized users in exchange for payment.
Selling tradelines can also make your account more vulnerable to data breaches and unauthorized purchases. You can reduce these risks by working with and experienced and reputable tradelines broker.
How Much Do Tradelines Cost?
The cost of a tradeline will depend on how old the credit account is and the credit limit on the account. For example, a seasoned tradeline with a high credit limit is going to be more expensive than a less seasoned account with a smaller limit.
Prices vary, but you can generally expect to pay anywhere between $150 to $1,000 or more for a tradeline. Keep in mind that you can also obtain a tradeline for free simply by opening a credit card or other credit account.
Making Money Selling Tradelines
When you "sell" your tradeline, what you're actually doing is renting your tradeline to another person for a limited period of time. The other individual can't use your credit, nor do they get access to any of your financial information.
How Much Can You Make Selling Tradelines?
The amount of mone you can make varies depending on your credit history and credit limit. According to Tradeline Supply Company, which is a tradelines broker, account holders earn anywhere between $50 and $350 per tradeline per month.
Generally, the older your tradelines and the higher your credit limit, the more you can expect to earn by selling access to your accounts.
How Do I Get Paid from Tradelines?
In most cases, a tradelines broker will send payment once you have kept the authorized user on your account for the agreed-upon period of time. Agreements vary by broker, but it's common for an account holder to keep an authorized user on their tradelines for two months.
A reputable tradelines broker will notify you when you've earned your commission. Once you've been paid, you're free to remove the authorized user from your account so you can sell your tradeline again if you choose.
Most brokers will submit payment by check or direct deposit, and you will receive funds within two to four business days after you've earned your commission.
Getting Started with Selling Tradelines
If you're interested in selling your tradelines, it's easy to get started. Here are the steps to follow to start making money on your good credit.
Open a Card
First, you need seasoned credit before you can sell access to your account. The longer your credit history, the more money you can earn when you start selling tradelines.
According to Tradeline Supply Company, an account is considered "seasoned" once it is at least two years old. This means you'll need to maintain good credit, including making all your payments on time, on your tradeline for a minimum of two years before you can sell access.
Find a Broker
While you can try to find buyers yourself, it's much safer to work with a broker. If you opt for the DIY route, you'll keep 100% of the money you'll make, but you'll have to manage the marketing, payment, and vetting process on your own, which is basically like running a small business.
Working with a broker means paying a fee for the service, but you receive a lot of services in return. Namely, the broker will deal with finding a buyer, vetting applicants, and processing payments.
Once you've found a tradeline broker you would like to work with, fill out their application and submit it. Many brokers let you do this online, so it's easy to apply.
Get Listed on Their Service
Once a broker has accepted your application, they will add your tradeline to their inventory. Many of the top tradeline brokers list their available tradelines on their websites, so buyers can browse tradelines and purchase right on the site.
Add and Remove Authorized Users
The best tradeline brokers have customer portals that let you see which authorized users are on your accounts, how much money you're earning, and when it's time to
remove an authorized user. When you're ready to add an authorized user, the broker will tell you the user's name, social security number, and other identifying information so you can add the user to your credit account.
If you're adding an authorized user to your credit card, you must go through the process your credit card company has in place. When you add the authorized user, you should make sure the additional credit card is sent to you rather than the authorized user so the user doesn't get access to your credit.
Potential Risks of Selling Tradelines
Selling tradelines isn't entirely risk-free. Before you sell your good credit, you should be aware of the potential drawbacks.
Any time you share your account information with a third party, such as a tradeline broker, you create another possible way for a cyber criminal to obtain your financial data. This is why it's important to work with an experienced broker who uses encryption to ensure your data is protected.
While a good tradeline broker will take steps to make sure an authorized user doesn't receive a copy of your credit card, there is a small chance this could happen, which means the person could end up with your card number. You can reduce this risk by enabling two-factor authentication, which requires you to put in a PIN when you use your card to make purchases.
Shut Down Accounts
Perhaps the biggest risk with respect to selling tradelines involves the possibility of getting your account shut down. Not all creditors approve of account holders selling access to their credit, and some creditors may simply close your account if they find out you're profiting from your good credit.
You can reduce your risk by pacing yourself when it comes to adding and removing authorized users. Take your time and avoid adding and removing people from your account too quickly.
May Violate Terms
Selling tradelines is not illegal, but there is a chance that selling your tradeline is a violation of your credit card issuer's terms and conditions. Before you sign up to sell your tradelines, check your credit card company's terms and conditions, so you can be certain you're not violating your cardholder agreement.
May Perpetuate Fraud
While buying and selling tradelines isn't illegal, the practice can be illegal if someone buys or sells a tradeline for purposes of engaging in fraud. For example, buyers of tradelines can venture into legal gray areas when they misrepresent their financial worth to banks.
If you have excellent credit, the hard work you put into building it could pay off in the form of money you earn by renting your credit to others. If you're interested in selling your tradelines, it's important to do your research and only work with reputable tradeline brokers.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.