An applicant has a credit report showing several 'closed' trade lines. What is the most accurate interpretation of a closed trade line for a mortgage agent?

Question: An applicant has a credit report showing several 'closed' trade lines. What is the most accurate interpretation of a closed trade line for a mortgage agent?

Answer options: ✅ Closed trade lines still contribute to the credit history and score, especially if they were in good standing, but do not indicate current credit activity.

• Closed trade lines are immediately removed from the credit report and have no impact on current credit scores.
• Closed trade lines always negatively affect the credit score, regardless of their payment history.
• Closed trade lines indicate that the applicant has too much available credit and is a higher risk.

Correct answer: Closed trade lines still contribute to the credit history and score, especially if they were in good standing, but do not indicate current credit activity.

Explanation: Closed trade lines, particularly those in good standing, remain on a credit report for several years (e.g., 6-7 years in Canada) and contribute to the credit history and scoring model, as per credit bureau reporting standards (Equifax/TransUnion).