Running a successful business is no easy task. If you own and manage a small business, you have probably been trying to get your business to the next level to no avail. But all is not lost. Tradelines may just be the thing your business needs to thrive.
But do you really know what tradelines are? How do they work? Who should use them? Why are they important to businesses?
One thing is for sure – tradelines are fundamental building blocks of credit and you should consider them to your business credit report. You will be surprised at how fast you will improve your credit score.
With that said, here’s what and why business tradelines are absolutely necessary for your business.
What Are Tradelines?
Planning on tapping a line of credit or applying for a loan? If so, it’s vital to build your business credit. This is where tradelines come in.
A tradeline is basically any account included in your credit report. Most, if not all businesses have various forms of credit including lines of credit, business credit cards, and loans. All these are good examples of tradelines.
These accounts contain crucial financial information from respective parties that you owe money. Different vendors, lenders, and credit card issuers use this information to provide business credit reporting bureaus with the relevant information on your payment activity.
Once this information is supplied to the vendors, a tradeline is then created. As opposed to bank credits, tradelines are strictly created on the basis of an agreement between a vendor and a business.
Assume that goods were supplied to you by a certain vendor on credit terms. As per your terms of agreement with the vendor, you are required to clear the bill 120 days after you receive the invoice.
Once that vendor files a report of your billing with a credit agency, a tradeline for business will automatically be created.
Who Should Use Tradelines?
Only a small percentage of American businesses utilize tradelines for business. According to the U.S. Small Business Administration, only one-fifth of businesses use these accounts.
So why are the numbers so low?
There are many factors that determine whether a business should use a credit service or not. One of them is financial stability. Why should you seek out a loan when you can comfortably afford to sustain your business? This is typically the case with large, well-established businesses.
For the most part, businesses that use tradelines usually have numerous assets and liquidity that act as collateral. At the same time, these businesses may have large amounts of cash tied up in unpaid credit extended to their customers. This means the cash may not be readily available when they need it.
The underlying factor is that any business can use tradelines to improve its credit score. They just need to maintain positive tradelines to show that they are able to meet their financial obligations on time.
Types of Tradelines
Tradelines generally vary due to the age of an account. That said, take a look at the two types of tradelines.
Tradelines with Zero History
As the name suggests, these are tradelines with no payment history. These accounts are not aged at all, thus posing no significant difference to the credit score of your business.
Tradelines with zero payment history will require that you submit a new formal application. This will also do very little to increase your credit score. In fact, in most cases, businesses applying for a tradeline usually face a decreased credit score. This is because they will often require a hard inquiry.
Normally, businesses applying for a tradeline will take between 12 and 15 months to realize an increment in their credit score. This is while maintaining a constant, on-time payment to the creditor.
Seasoned Tradelines
Unlike tradelines with no history, seasoned tradelines have a perfect payment history of credit. This is usually achieved after a period of 12 to 24 months.
Seasoned tradelines are perfect for increasing your credit score to a positive one. This is only if you are able to meet the given lending criteria.
Once you have a seasoned tradeline, creditors will be able to match your profile with probable tradelines with ease. This way, you can secure a loan within the shortest time possible.
The best thing is that different tradeline services will work with you to give guidance on how you can achieve success with your credit report. This way, you will be able to benefit from tradelines without any itch.
What Are the Benefits of Business Tradelines?
When done right, the benefits of tradelines are numerous. Within a short time, you will be amazed by just how much your credit scores will have improved. Your business will experience unmatched returns. This can only be achieved by keenly following the stipulated regulations.
So, how can your business benefit from tradelines?
1. Increased Chances of Loan Approval and Credit Score
It goes without saying that a poor credit score hurts your chances of getting loan approval. First, you will avoid applying any business loan for fear of being turned down. Secondly, your chances of getting a business credit card will be very low.
The only remedy to these two situations is to secure a tradeline for your business. Even so, you will need to buy tradelines wisely to avoid running your business down to closure.
You won’t have any problems paying back your bills once you follow the correct procedure. You will be surprised that creditors won’t be looking at you debt or potential income when applying for a loan.
Once you achieve a seasoned tradeline status, your credit score will significantly increase. This way, you can apply for more loans with much confidence.
2. Your Interest Rates on Loans Will Be Decreased
The market is thronged with an array of creditors offering tradeline services. Due to competition, the vast majority of these services offer low-interest rates on loans. You should be on the lookout for commercials on such offers.
However, you should note that these deals are only available to businesses with impressive credit scores. The only way to qualify for such loans is having tradelines for your business. This way, you will be able to have a perfect credit score and get access to these loans.
Additionally, the low-interest rate will be tied to your future credit score, thus improving your chances of qualifying for future loans.
3. You Will Get Better Insurance Rates for Your Business
Insurance companies are always on the lookout for poor credit scores to quantify whether to issue an insurance cover for any business. This can work against you if you have no tradelines.
Tradelines lead to a better credit report. With perfect credit scores, your business will be on the forefront to automatically qualify for an insurance cover. Insurance companies will have nothing against you and you will easily get access to a business insurance cover.
Just like creditors, insurance companies know that businesses with low credit score often fail to pay the annual subscription fee.
Additionally, such businesses are always looking for ways to cut down on loses by filing more insurance claims than others. This makes insurance companies to pay more, thus being wary of them.
With tradelines, you will be able to pay less money for business insurance compared to others. Of more importance, you won’t have a rough time getting an insurance company to cover your business.
4. It Improves Your Prospects of Getting More Business
Even though many businesses rarely look for credit scores when getting into business deals, they often look at how your business makes payments. This is a shorter version of your credit score which gives a clear impression of how your business operates.
Other big businesses seeking to invest in your business will look to know if you running your business responsibly.
The vast majority of them believe that if you pay your debts on time and use your credits responsibly, then you are running a profitable business. To be on the safe side, you should ensure to buy business tradelines.
Buy Business Tradelines and Secure Your Business Today
Building solid business credit should be a top priority for any entrepreneur that wants to grow their business.
While you don’t need business tradelines to have a business credit report, it may be difficult to build business credit without them. This is because the number of tradelines on your business credit report may have a significant impact on your credit score.
Are you looking to get business tradelines? Feel free to contact us today for assistance.