Passive Income Using Tradelines
If you're looking for a passive income stream, selling credit card tradelines could be a decent option. Credit card tradelines are credit accounts that appear on your credit report, and allowing others to become authorized users on your account can provide a way for you to earn money while helping others improve their credit score.
Selling credit card tradelines can be a good way to earn passive income, but it's important to understand the risks involved and to ensure that you're managing your account responsibly. Before you decide to sell credit card tradelines, do your research and consult with a financial professional to determine whether this strategy is right for you. This is not financial advice, do your own due dilligence!
Ok, now that we got that out of the way, let’s take a look at how tradelines work.
How Selling Credit Card Tradelines Works
When you sell credit card tradelines, you're essentially allowing someone else to become an authorized user on your credit account. You'll continue to make all payments on the account, but any positive credit history associated with the account will also be added to the buyer's credit report, potentially improving their credit score. In exchange for this benefit, the buyer will pay you a fee for the use of your tradeline. The buyer will never receive any of your cards or have any access to the credit available on the credit lines being used.
Benefits of Selling Credit Card Tradelines
One of the main benefits of selling credit card tradelines is that it can provide a passive income stream without requiring a significant investment of time or money. You don't need to take out a loan or open a new credit account, which can be time-consuming and expensive. Instead, you can simply add authorized users to your existing credit account and earn money from the positive credit history associated with the account.
I have been selling tradelines for a few years now and make a few thousand dollars a year doing it and spend maybe a total of around an hour or two per year doing any work associated with it. That’s a very nice time to earnings ratio!
My tradelines earnings over the past 2 years
Risks of Selling Credit Card Tradelines
While selling credit card tradelines can be a lucrative option for earning passive income, it's important to understand the risks involved. The main risk is that the practice of selling credit card tradelines could be viewed as inappropriate activity by credit card companies. While it is technically not illegal nor explicitly called out in their policy, abuse of adding authorized users to your account may wind up with your card getting shut down. Credit card companies can terminate an account at their discretion at any point. This can have a negative impact on your credit score and could also prevent you from qualifying for a new card with that company in the future.
I have not had any issues if I stick to the schedule that the tradeline company provides me (usually a max of 2 authorized users per an account at a time). However, I have had one card shut down permanently when I first started out because I was adding way too many authorized user at a time (in the 4-6 range). I was using a different company than I use today, and they did not keep the authorized user load low enough.
How To Get Started
I use the Tradeline Supply Company to facilitate the whole process. They are the market makers who match those in need of tradelines with those selling it. As the seller, you remain anonymous and only deal with the company. The process is super simple and the main criteria for a given tradeline is that you must maintain less than 10% utilization on any card used and the card age must be more than one year old.
The payout is based on the credit limit and the age of the card. See the below for the matrix to calculate what you might be able to earn.
The steps to getting started are as follows:
Set up your account with Tradeline Supply Company. They’ll ask for Credit Karma login so that they can do a soft inquiry on your credit card inventory.
Once they’ve assessed your inventory, they’ll give you a quote and ask for you to confirm which cards you’d like to add to the tradeline inventory.
They will then contact you when someone has purchased your tradeline. They’ll provide all of the information of the buyer to allow you to add them as an authorized user.
Add the authorized user to your account. Make sure that you don’t request a card to be sent or if necessary, make sure it is mailed to you and not the buyer. Most credit card companies mail it to you by default, but just make sure. A number of credit card companies allow you to do this online, so it only takes a few minutes to do.
You’ll then leave the buyer on your card for about 2 months.
Profit. You’ll receive an email at the end of the period notifying you that you that you will be paid and that you can now remove the user from your account.
Rinse and repeat.
If you do decide to give it a try, I’d suggest just using a card you rarely use to test out the waters and see how it goes. You can then always add more if you feel more comfortable and are ok with the associated risks.
