Credit History Depth: Understanding Trade Line Requirements
Rule
To qualify for a DSCR loan, a guarantor must demonstrate a "depth of credit" beyond just a high FICO score. Lendency requires at least three (3) established trade lines (open or closed) on your credit report. Within that history, you must have at least two (2) active trade lines (showing activity within the last 60 days or maintaining an active balance) and at least one (1) trade line with a history of 24+ months.
Lendency Insight
A credit score is only half the story; the other half is the "age" and "activity" of your accounts. We use these requirements to ensure that a borrower has a proven track record of managing debt over a significant period. For example, a borrower might have a 740 score but only one credit card that was opened six months ago. In the eyes of an underwriter, that score is "thin" and doesn't represent the long-term reliability needed for a 30-year mortgage. By requiring at least one account with a two-year history and two accounts with recent activity, we can confidently verify your habitual repayment behavior.
Common Scenarios & FAQs
Can I use an "Authorized User" account? No. While being an authorized user on a spouse’s or parent’s card can help boost your score, it does not count toward our three-trade-line requirement. The accounts must be in your own name (individual or joint).
Do closed accounts count? Yes, for the total count of three. If you had an auto loan that you paid off and closed last year, it counts as an established trade line. However, it would not count as one of the two "active" accounts unless it showed activity within the last 60 days.
What defines an "Active" trade line? An account is considered active if it has a balance (even a small one) or if the credit report shows the account was used or updated within the 60 days prior to the credit report date.
Are collection accounts considered trade lines? No. Derogatory accounts, collections, and charge-offs are excluded from the count. We are looking for "positive" trade lines that demonstrate successful debt management.
What if I only have two trade lines? If your credit is "thin," you may not meet the minimum eligibility for our DSCR programs. We recommend opening a secured card or a small installment loan and waiting until that history populates your report before applying.
Key Definitions
Trade Line: A technical term used by credit reporting agencies to describe a credit account (e.g., credit cards, auto loans, mortgages, student loans).
24+ Month Rating: A designation that an account has been open and reported to the bureaus for at least two full years.
Thin File: A credit report with very few trade lines or a very short credit history, which makes it difficult for lenders to assess risk.