Business Tradelines That Build Your Business Credit
Business tradelines—sometimes called trade references or trade information—are credit accounts that appear on business credit reports.
On personal credit reports, you may have personal tradelines for your personal credit cards, loans, and lines of credit. For business credit reports, there are two types of business tradelines, financial tradelines and vendor tradelines.
Your company’s financial tradelines are tradelines that a bank, credit union, or financial institution reports. Financial tradelines illustrate your company’s history of obtaining and repaying (or missing payments) on financial products, such as a business credit card, loan, lease, or line of credit.
Additionally, business credit reports can have vendor tradelines. These are also known as trade credit, merchant, corporate, or supplier tradelines. Vendor tradelines are the net payment accounts you may have with suppliers and vendors.
For example, if you open a net-30 account with a vendor, you’ll have 30 days to pay an invoice. Your company’s credit report may show how much credit you used and whether you made your payments early, on time, or late.
There are several business credit bureaus that track business tradelines, along with other information about your business.
Some bureaus specialize in financial tradelines, while others focus on vendor tradelines. A few commercial credit reporting agencies collect and categorize data about both types of tradelines.
For example, Experian’s business credit reports may list all your business’s credit accounts and categorize the tradeline company as financial, supply, services, utilities, or transportation.
Experian is also a consumer credit bureau, but your Experian business credit profile is completely separate from your personal Experian credit report.
In contrast, Dun and Bradstreet (D&B) only tracks business credit and focuses on vendor tradelines. It also categorizes a company’s trade payments. D&B may group your trade credit accounts by industry rather than listing each supplier.
Why Are Tradelines Important?
Business tradelines can be important because they can help other businesses and organizations determine your company’s creditworthiness.
Your business credit reports may have overviews of your company’s history of paying its bills and trade credit accounts.
They also often have details about the business, such as how old it is, the industry, whether there are outstanding liens or judgments, and information about the owners.
Someone may review your business’s credit reports when you apply for a loan, line of credit, lease, insurance, or trade credit. Or, when you try to get a contract with a major corporation or government agency.
Many business credit reports also come with business credit scores or creditworthiness ratings, and your tradelines can directly impact these.
For example, the D&B Paydex Score ranges from 1 to 100. You need to make on-time payments on your trade accounts to get a score of 80. If you want a higher score, you need to pay earlier than your trade credit accounts require.
4 Things You Should Know About Business Tradelines
Using credit can be important for running and growing your business. But there are a few things you should know about tradelines in particular.
1. Not All Businesses Report Tradelines to a Business Credit Bureau
Taking out a business loan, line of credit, or opening a trade credit account can help you build business credit, but only if the tradeline appears in your business credit reports.
Some companies don’t want to invest the time or money it takes to create a reporting system and send updates to the credit bureaus and companies aren’t required to report your accounts or payments.
Fortunately, there are many companies that will report your tradelines. But, even then, you want to check which business bureaus they report to.
After all, building business credit with Experian can be important, but it won’t be if you apply for trade credit with a supplier that checks your Equifax Business or D&B report.
2. Be Cautious About Buying Tradelines or Shelf Companies
If you’re looking for a shortcut to build your business credit, you’ll quickly find there are companies that will sell you tradelines. Often these are “seasoned” tradelines, meaning they’ve been established for some time.
Generally, the seller will make your business an authorized user on the tradeline. Or, it may try to sell you a shelf company—a company that’s formed on paper and then sits on a shelf until it’s sold.
The idea is that you can buy a company that has a long “time in business” and established credit. You can then use its “history” to qualify for contracts and higher funding limits.
Purchasing tradelines and shelf corporations aren’t technically illegal, but lenders don’t like the practice. If a lender finds out that you used these tactics, it could get you in trouble.
Buying tradelines or a shelf company with the intent of misrepresenting your credit history and applying for a loan or credit account could be considered fraud.
3. Maintaining Tradeline Activity Is Important
Once you establish tradelines for your business, keeping your accounts active can be important. After all, other businesses and creditors want to see that you have a track record of paying your bills on time, or in the case of companies using D&B Paydex Scores, paying them early.
With Experian, a tradeline will be considered new when it’s first added to your credit report. It becomes a “regular” tradeline if it’s updated with new activity at least once every three months.
However, if three months pass without any activity, the tradeline becomes an “aged” trade. If there aren’t any updates for 36 months, the tradeline can fall off your Experian business credit report—although it can go back to regular status if it’s updated in the future.
4. You Want More than One Tradeline
Similar to how having a tradeline without information isn’t particularly insightful, you want to have more than one business tradeline to augment your business credit report.
Having several tradelines with a long history of on-time payments can be especially helpful for building good business credit scores. It may even be a requirement for some business credit scores.
For example, the D&B Paydex scoring model requires at least two tradelines (some people report needing three) and three trade experiences (payment records) before your business is scorable.
How Do You Get a Business Tradeline?
You can get a business tradeline by opening a credit account with a company that reports to at least one of the business credit agencies. If you’re not sure if a company reports, you can contact the company and ask before applying for financing or trade credit.
You can also ask your current suppliers or vendors to report your account to one or more of the credit bureaus. However, as discussed above, they may be reluctant to spend resources on reporting.
If you’re having trouble getting approved for a loan, line of credit, or trade credit account, try contacting the company’s credit department. They may be able to clearly explain the requirements and why they’re denying your application.
For example, your business may need to be at least six months old before it can qualify for trade credit, or you may need to have established tradelines elsewhere.
Sometimes, it will be easier to qualify for trade credit after placing several orders and showing you’re a good customer.
How to Find Business Tradelines That Report
If you’re looking to get started or want to add new tradelines to your credit reports, here’s a list of suppliers and vendors that offer easy-approval net-30 accounts.
Some of these companies offer office, shipping, and cleaning supplies that your business may need to buy anyway. By establishing payment terms with a supplier and buying these items using a net-30 account, you can improve your cash flow and build credit at the same time.
Introducing Credit Strong’s Business Tradeline – No Personal Credit Required!
Credit Strong Business also has a secured installment loan you can use to add a financial tradeline to your business credit file. When you open a business credit-builder account, your loan will be locked in a business savings account—that’s what secures the loan.
Credit Strong will report your account and payments to Equifax Business and PayNet, two commercial credit bureaus. We will also add Experian and Small Business Financial Exchange (SBFE) reporting for existing and new customers soon.
You can sign up for either a five or 10-year plan, and there’s no prepayment or early termination fee if you want to close the account early.
Business Tradeline FAQs
What is a business tradeline?
A business tradeline is a financial or trade credit account that appears on a company’s credit report. Establishing tradelines and paying bills on time (or early) is an important part of building your business’s credit.
Can you buy business tradelines?
You can buy business tradelines online. If you do, the seller may add your business as an authorized user on an established tradeline or sell you a shelf company that has established credit. We don’t recommend this practice.
Is purchasing a business tradeline illegal?
Purchasing a business tradeline isn’t illegal, but that doesn’t mean it’s a good idea. Misrepresenting your business’s credit history on a bank loan application may be considered fraud. You could also hurt your relationship with creditors and credit bureaus.
How do I get tradelines on my business credit?
You can get tradelines by opening accounts with companies that report to the business credit bureaus.
Credit cards, loans,leases, and lines of credit can add financial tradelines to your credit reports. Trade accounts with vendors or suppliers (such as net-30 accounts) can add vendor tradelines to your reports.
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