Trying to fix your business credit on your own can be a frustrating task. Good credit can take a while to build and only a few poor choices to destroy. Things like payment history on your business credit cards or the number of trade lines open can negatively impact your business credit profile, and for many businesses, there aren`t enough positive tradelines or factors to swing the numbers in the opposite direction. Though difficult, it is not impossible, particularly when you used aged tradelines to rebuild your credit file and history.
What Is a Tradeline?
The term tradeline is used by the credit reporting agencies to reveal the different accounts on your business credit report. The tradeline includes information about the credit and the debt owed. Revolving tradelines are lines of credit and business credit cards, while an installment tradeline could be a mortgage on your business property, an auto loan for a company vehicle or a personal loan for the company. There are several different pieces of information the tradeline holds, with the following being some of the typical items:
- Type of account
- Lender information
- History of account activity
- Financial value of the account
- Payment requirements and history
What Is an Aged Tradeline?
Synonymous with a seasoned line of credit, a tradeline that is aged is an account at least two years old with an active status for the entire time since originally established. Not all lending companies or vendors report transactions or credit accounts to a reporting bureau, and this could make it harder for you to build a seasoned line of credit. Your FICO number or credit score depends on the status of your tradelines, how many tradelines are open, how long the lines have been open and overall payment history. An older tradeline with a good payment history and responsible use positively impacts your credit score.
Your business credit score is tallied according to all the tradelines reported to the credit bureaus. While a score may be high, tradelines allow lenders to look at the specifics of your credit account to get a more detailed snapshot of your creditworthiness. Falling behind on payments with one card or having a high utilization rate can be looked at more thoroughly, with creditors seeing a balance between actions and overall risk. For instance, maxing out a $300 credit card may not be as much of a detriment to your creditworthiness as maxing out a $20,000 card.
With aged tradelines, there are more details available for creditors wanting to evaluate the likelihood that you are a good credit risk or if you have had a lengthy positive credit history. The information in a seasoned tradeline can be powerful enough to get rid of negative information or inaccuracies on your credit history and let your accounts start new.
How Do You Build a Positive Tradeline?
To have a positive credit history, your business needs to have at least three aged and active tradelines. Though it is possible to have more accounts open, credit utilization and debt to income ratios can be a negative factor on your overall score. It is best to keep your accounts limited and have positive reporting associated with each one. Simply opening more accounts doesn’t build a positive credit report, especially if the accounts aren’t reported to the credit bureaus. You can use accounts with lenders and potential suppliers or vendors to get tradelines going.
To ensure a positive impact when your activity is reported, pay your bills early or on-time. Payment history has a substantial impact on the credit score, and even if you are only a few days late on the bill, it could show up as a negative hit on your business credit report. Paying early can increase your chances of a higher score, too. Keep your accounts in good standing by staying under the limit and having a low utilization ratio. Keeping the account active also ensures you can develop an aged tradeline.
Where Can You Get Help With Tradelines?
Some small businesses don’t have the credit history needed to secure new tradelines, and this impacts their ability to develop positive credit. It is a terrible position to be in, to require credit to get credit, but many companies that are just starting out have limited resources for building credit. Business credit cards are one of the more common options to starting a tradeline, though the success of approval often hinges upon the personal credit of the business owner. Poor personal credit could impact the ability to build good business credit.With Coastal Tradelines, you have another option for restoring your credit and giving your business credit report a boost. Through the assignment of an authorized user on the established, favorable tradelines of our partners, you receive a credit score increase. Being an AU on aged tradelines gives your credit history a noticeable leap forward and makes it easier to achieve your financial goals. Call us today at 619-363-1472 or reach out online to find out how we can help your business credit.