Tag: Tradelines

It’s Not Worth It: Here’s What 6 Organizations Have to Say About Buying Business Tradelines for Sale

You probably know why you need tradelines on your business credit reports. However, there is a right way and a wrong way to get them there. Adding tradelines is important, but you should definitely avoid business tradelines for sale. Buying tradelines can hurt more than it helps. 

Buying Business Tradelines for Sale Isn’t The Shortcut it May Seem

Honestly, there are no shortcuts in life or business. Think about it. Inevitably when you try to cut corners to make things go faster, you miss something important. More times than not, it ends up costing more time and money than it would have if you had just done it the right way to begin with. This is as true about building business credit as it is anything else. 

Still, some people try shortcuts anyway. The top three “shortcuts” to building business credit are:

For many, buying tradelines seems like the easiest and least risky shortcut. However, these 6 organizations agree, it’s just not worth it. 

#1 Federal Reserve

“The potential distortions in credit scores that piggybacking credit may introduce suggest that a reconsideration of existing regulations, industry practices, or both may be warranted to preserve the predictiveness of credit scoring models.”

Credit Where None is Due? Authorized User Account Status and “Piggybacking Credit”, Robert B. Avery, Kenneth P. Brevoort, Glenn B. Canner (Federal Reserve Board, March 5, 2010) 

# 2 Dun & Bradstreet

According to a Former D&B Employee:

“Opening a business credit account with any company is free. If you are paying for it, you are being ripped off. When the company who sold that tradeline to you gets taken down, all of their clients will get punished, too, with a mound of debt and a cursed credit file that will keep you from getting more credit to be able to pay it off.”

Joy Greenwood, 10 Common Trade-Line Mistakes, June 5, 2015

# 3 The FBI

When commenting on a 2013 bust of a fraud ring, “A second kind of tradeline is the “authorized user” tradeline, where a credit card holder adds another, so-called “authorized user,” to a credit card account. This raises the credit score of the authorized user, who inherits some of the primary user’s credit history.

Some defendants created and sold fake lines of credit for false identities made up by other defendants. These fraudulent primary tradelines were then used to increase the credit limits on fraud cards, so that the defendants could reap even larger profits. Defendants used the authorized user tradelines to create new identities.”

#4  FICO

FICO’s opinion on piggybacking is obvious here: “A … shadier version of piggybacking has been promoted by some CROs who offer to “rent” to their credit-challenged customers the trade lines of established account holders, in an effort to boost their customers’ credit profiles and scores.”

#5 Equifax

Equifax: “… authorized user abuse occurs when low-risk primary card owners “rent” their tradelines with extensive credit histories, high credit limits and solid repayment profiles to others – most times, knowingly, to fraudsters.”

#6 Experian

Experian: “Buying tradelines may be viewed as deceptive by lenders and credit reporting agencies, and could even put you in danger of committing bank fraud.

Credit scores are designed to help lenders determine a borrower’s creditworthiness, and most use your credit scores and credit reports to determine whether to approve a credit application and what terms you qualify for.

If you pay money to improve your credit scores without doing any of the work or even getting a card to use, you could be falsely representing your creditworthiness to potential lenders.”

Buying Business Tradelines for Sale

So, what are business trade lines, and how does buying business tradelines for sale work? Legit business trade lines are lines of credit extended to businesses by vendors. A business gets goods or services and agrees to pay for them at a later date. Tradelines are often established between a business and a vendor, rather than a line of credit offered by a bank. They can help businesses build credit by rapidly building positive credit experiences. 

There are many companies online which promise to sell ‘seasoned’ tradelines. If your company has poor or little credit, you can pay to have your business piggyback on the account of someone with well established, strong credit. This allows new business owners to seem more creditworthy than they really are. Sounds fishy right? 

How Does Piggybacking a Tradeline Work?

A third party uses a creditworthy borrower’s accounts to improve their own credit. The borrower adds the third party as a user of his lines of credit. But, he or she does not actually provide the third party with credit cards or account numbers. The third party has no way to actually make charges against the account. As a result, that third party user never actually uses the credit. 

The benefit to the third party is an improved credit rating. It appears they already have higher limit revolving accounts. In theory, showing you already have credit makes you more creditworthy for higher limit accounts. Some companies claim to be able to secure $100,000 – 250,000 credit lines once these accounts are reporting.  Obviously, this buying of business tradelines for sale is dishonest.

A company offering the piggybacking service maintains a network of creditworthy ‘card holders’ or ‘vendors.’ They will add strangers to their accounts as users for a fee. A third party, looking to increase their credit score, contacts the company. Then, the company selects one of the business  tradelines for sale to the client, and charges the client a fee per account. 

It Works for Personal Credit, so What’s the Problem?

 Now, it’s important to note that personal credit works differently than business credit in this area, and many other areas for that matter. 

Consumer trades such as this are legitimate. A person with poor credit can use this strategy without issue. So, if you know someone with great credit, it is perfectly fine to ask if you can become an authorized user on their card. You never need to use the card, and it can still help to raise your personal credit scores.

But, in the business credit realm, things are much different. Consider what the following agencies have to say. 

Lenders Know All About Business Tradelines for Sale 

Lenders and CRAs know all the unethical methods out there. They know what to look for, and they are looking.  For example, when they see a change in company ownership, or a new authorized user on a card, they dig deeper.  Furthermore, sooner or later D&B will figure out you are using business tradelines for sale. If a tradeline sales company inquires into your credit report, D & B finds out.

Any time you buy a tradeline, the seller checks your credit. Of course they do, because they want to be sure they get paid. When this happens, here is what happens next:

  • D&B shuts down tradeline(s) 
  • They red flag your entire profile, including legit trades alongside the illegitimate ones
  • You lose whatever time you think you gained by using business tradelines for sale
  • Plus, you’re out the cost of the tradelines

In addition, when a company has a reputation of being a tradeline seller, that company will be flagged as such. Any new inquiries by that flagged tradeline seller harms buyers, including older tradeline sales. There is no Statute of Limitations on this.  That means, if you bought tradelines 50 years ago, D&B may still find out and it can still harm you. 

Buying Business Tradelines for Sale is Not Worth It

Buying tradelines involves buying tradelines that belong to others and putting them on your credit report. While not technically illegal, it is dishonest.  If a lender figures out you are doing it, you could be black balled.  It isn’t worth it.

Still, adding tradelines to your business credit report is vital. You just have to do it the right way. Our Business Finance Suite helps you do just that. It walks you through the process step-by-step, so you get your own tradelines that you can actually use.  Find out more today by getting a free Business Finance Assessment with a Credit Suite specialist. 

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5 Reasons to Start Adding Tradelines to Your Credit Reports

Your business credit report needs tradelines.  Not just one or two either. The truth is, you need to start adding tradelines to your business credit reports, and here’s why.

Top 5 Reasons for Adding Tradelines to Your Credit Report

Your business credit report reflects the creditworthiness of your business. It is not connected to you personally.  As a result it needs to have business tradelines reporting to it. Why?

1. It can help establish a business credit score. 

Your business credit is separate from your personal credit. For one, you have to be intentional about building it. Not all vendors will report payments to your business credit report.  That means, you need to add tradelines that do.   You’ll likely need help with this from a business credit expert, as most vendors do not make publicly known whether they report or not. 

2. It establishes a PAYDEX score with D&B.

You need tradelines on your business credit report to establish a PAYDEX with Dun & Bradstreet. They are the largest and most commonly used business credit company. So obviously, having a PAYDEX is important. D&B says you only need two.  However, many report that in their experience it took 3 tradelines reporting to establish a PAYDEX.  

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit, even in a recession. 

3. It can help raise your business credit score.  

Remember, this only works if you pay on-time. However, if you do, the more the merrier.  When you add tradelines to your business credit report, and handle them responsibly, you are only helping your business credit score grow.

4. Adding tradelines to your credit report is a way to build business credit without good credit.

Tradelines break the vicious cycle of “you have to have credit to get credit.”  They typically do not take credit into account for approval. Rather, they look at other things to determine credit worthiness like time in business,  business revenue, and business bank account balance. 

5. Strong business credit is essential to running a strong business and protecting your personal credit.

And as we said, you need tradelines to establish business credit, let alone build it. Business credit allows you to fund your business without jeopardizing your personal credit.  

Bonus: Buying Business Tradelines Won’t Help You

Buying tradelines basically involves buying tradelines someone else has been using and putting it on your credit report. While it is not technically illegal, it is definitely frowned upon.  If a lender figures out that you may be using business credit that you did not actually build yourself, you could be blackballed and lose any advantage you thought you were getting by buying tradelines. So don’t do it.

Adding tradelines to your business credit report is necessary. It is how you establish business credit in the first place. Then, it’s how you continue to grow it to a point that you can apply for other types of accounts. For example store cards, fleet cards, and business credit cards that can be used anywhere for anything require strong business credit. A strong business credit score will help you get better terms and rates on business loans and lines of credit as well.  This is true even though they will check personal credit also.  So, the sooner you work on this the better. Get started now.

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5 Things You MUST Know about Business Tradelines

Business tradelines are the accounts on your business credit report.  We are going to tell you everything you need to know about why you need them, how to get them, and how to use them to build strong business credit. And How to Get Them Without Already Having Business Credit Business tradelines, and terms like … Continue reading 5 Things You MUST Know about Business Tradelines

5 Things You MUST Know about Business Tradelines

Business tradelines are the accounts on your business credit report.  We are going to tell you everything you need to know about why you need them, how to get them, and how to use them to build strong business credit.

And How to Get Them Without Already Having Business Credit

Business tradelines, and terms like it,  are thrown around in the business world with the assumption that everyone knows what they mean.  However, these assumptions can cause problems when they are wrong. Then you run into issues with people using terms in ways they are not meant to be, to mean things they do not really mean.  As you can imagine, it can cause a lot of confusion. 

Our goal is to clear up that confusion.  We intend to lay out for you exactly what tradelines are, why you needed them, and what you don’t know about them that you definitely need to know.  

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

What Are Business Tradelines?

The term in question, business tradelines, simply refers to accounts that report your payments to the business credit reporting agencies, or CRAs.  That could be vendor accounts, business credit cards, or a select few other things. Most often the term refers to vendor accounts. 

You buy stuff from these vendors, and they allow you to pay them at a later date. We call this net terms.  It is different than revolving credit, because you have to pay the whole balance by a certain date.  

That means they will bill you for the goods or services you buy from them, with the understanding you will pay within a certain amount of time.  Most often, it is 30 days, or net 30 terms. Occasionally they will extend net 60 or net 90 terms. 

If you know anything about tradelines, that is likely the extent of it.  Now, here is what you don’t know.  

5 Things You MUST Know About Business Tradelines That You Probably Don’t Know Already

This is the information that can get confused from source to source.  We’re going to clear it up for you. 

  1. Not all Business Tradelines are Good for Building Business Credit

Tradelines are only good for building business credit if they report your payments to the business credit reporting agencies, or CRAs.  These include Dun & Bradstreet, Experian, and Equifax. There are a few others as well, but these are the big three.  

The thing is, not all of them do report payments.  They are not required to do so, and many do not. You have to find those vendors that will report your payments if you are going to use them to build business credit. 

  1. Buying Business Tradelines is a Bad Idea

Since it can seem almost impossible get business tradelines without credit, someone somewhere at sometime had the idea to create companies, use them to obtain tradelines, then sell the tradelines to those who wanted fast business credit. 

Essentially, these are shelf companies that have years’ worth of seasoned tradelines.  They market to new business owners as a way to access funding they would not otherwise qualify for. It sounds great.  You pay a lot, but you get the potential access to so much more. 

The truth is however, that lenders are not dumb.  They caught on to this ruse quickly, and though it is not technically illegal, it is very much frowned upon.  If a lender catches wind of the idea that you may be using business credit that you did not actually build yourself, you could be blackballed.  That means, not only would you not be able to get funding based on the credit you purchased, but it would block you every time you try to build credit on your own. 

  1. You Can Get Business Tradelines without Already Having Business Credit

Business Tradelines Credit Suite

This is the little-known secret to building business credit that you have been looking for.  If you start with vendors in the vendor credit tier, known as starter vendors, you can get tradelines without having business credit at all.  When they start reporting the CRAs, your credit will start to grow on its own without you having to spend a dime other than what you buy from the tradeline vendors that your business needs anyway. 

Once you have enough business tradelines reporting from these starter vendors, your credit should be strong enough to start applying for credit cards in the other credit tiers.  As you gather more accounts in each tier, you will be able to move on to the next tier. 

2. You Need to Get Business Trade Lines in a Specific Order

I touched on this above.  If you are using business tradelines to build business credit, you can’t just start applying for business credit cards right away.  They will deny you every single time. You have to start with establishing tradelines with those starter vendors in the vendor credit tier. 

3. Too Many or Too Few Tradelines Reporting Can Affect Your Business Credit Score

The problem with this is, the CRAs are pretty tight lipped on where the sweet spot is.  That said, your best bet is to open only as many accounts in each tier as you need to move on to the next.  Then, only close accounts if you absolutely must.  

One thing we do know is that Dun & Bradstreet requires at least three tradelines reporting before it will even calculate a Paydex, which is the score lenders most commonly use.  It is the most like the personal FICO score.

3 Tips to Establishing Initial Business Tradelines Without Established Business Credit

Along with the Vendor credit tier, which I will talk more about below, there are a couple of other options for getting initial business tradelines reporting your payments. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Ask Bills to Report

You pay things like utilities, rent, telephone, and internet each month already.  These companies do not have to report to the CRAs, but some will. You’ll have to ask, but the worst they can say is no.

Work with Current Vendor Relationships

If you have been in business long enough to have vendors that you already have a good relationship with, use that to your advantage.  Open a discussion about net terms on invoices and see what they will offer. You may be able to get some tradelines reporting without a credit check that way, and build to the next tier faster. 

The Vendor Credit Tier

In addition to these options, the vendor credit tier is the best place to get started when it comes to building business credit.  Many of the vendors in this tier will extend net terms and report payments, without doing a credit check. Instead, they will rely on length of time in business and income to determine eligibility. 

Now you are probably asking yourself, who are these vendors.  There are several, but some of the easiest to get started with include: 

Quill

Quill sells office equipment, packaging, and cleaning supplies. They report to D&B and Experian.  Because they report to two separate credit reporting agencies, you get two credit experiences with them. Place an initial order first unless you already have a D&B score.  Then, if you order items every month for 3 months, they will typically approve you for a Net 30 account.

When you check out you will see the option to buy now and pay later.   Use your business information to fill out the form. Don’t worry about it when they ask how long you have been in business. Because even new business owners often report approval.  It can take a couple of hours to get approval. It may even take a couple of days if you apply on the weekend.

Uline

Uline sells shipping, packing, and industrial supplies, and they report to D&B.  You must have a D-U-N-S number. They ask for 2 references and a bank reference. The first few orders may need to be prepaid to first get approval for Net 30 terms.

When you check out you will see the option for them to send you a bill.  If you choose this option and check out successfully, you know you got approval. 

Grainger

Grainger Industrial Supply sells safety equipment, plumbing supplies, and more.  They report to D&B, and they require a business license, EIN, and a D-U-N-S number.  If you have these things, you may get approval for a $1,000 line of credit.

What are The Other Credit Tiers? 

If you are new to the idea of business credit, this is likely a question you are asking yourself as you read this.  I keep talking about the other credit tiers, but what are they? The tiers work similar to stair steps, with the vendor credit tier being the bottom step.  You cannot move up to the next step until you have enough vendor credit tier accounts reporting. 

Once this happens, you can move up to the retail credit tier.  These are cards that you can only use at the specific stores that issue them.  For example, a Staples Card or a Best Buy Card would be in this tier. When you have enough of these types of accounts reporting, you can apply for cards in the fleet credit tier.  These are cards from companies like Shell and Fuelman that are exclusively for costs related to fuel and auto maintenance and repair. 

After you gain enough accounts in each of these tiers you can apply for cards in the top tier, the cash credit tier.  These are the standard cards with lower interest rates, higher limits, and no limitations on where you can use them or what you can use them to purchase. 

Be Sure Business Tradeline are Reporting to Your Business Credit

It isn’t a given that these tradelines will report to your business credit.  You have to have to business set up properly for that to happen. What does that mean?  It means setting up your business as a separate entity from yourself as the owner. 

The first step in this process is to make sure your business has its own contact information. Your phone number and address are identifying factors on your personal credit. So, if your business shares the same information, things are not going to get confused and mixed up. 

Other Ways to Set Up Your Business Separately from Yourself

  • Get an EIN. This is an identifying number for your business similar to your SSN.  So use it instead of your SSN when applying for business credit. 
  • Formally incorporate your business.  A corporation, s-corp, or LLC will do serve the purpose, so choose based on your budget and liability protection needs. 
  • Open a separate business bank account.  This will not only serve to help separate your business from yourself, but it will come in handy at tax time as well. 
  • Set up a professional business website.  Pay for hosting. A free service won’t work.  Also, get a business email address with the same URL as the website.  Stay away from free services such as Yahoo and Gmail. 
  • Get a D-U-N-S number.  You cannot have a credit profile with Dun & Bradstreet without one, and since they are the largest and most commonly used business CRA, you need a profile with them.

If you set up your business in this way, and apply for credit using the business information and not your own, your tradelines should report to business credit and not personal credit. If you are already up and running and haven’t done these things, it’s not too late.  Get started now. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Going Forward: Business Credit Monitoring

After you have business trade lines reporting to the business CRAs, be sure you keep an eye on your reports.  So, they will likely not show the name of the companies reporting, only the types of companies. That means you need to keep track of your accounts and match them up so you know who is reporting what.  You will also want to watch for any mistakes and get them corrected. We can help you monitor your business credit on a regular basis here. 

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