Personal Tradelines Can Help With Business Credit

Share This Post


Starting your own business can be a dream come true. Unfortunately, many people become hindered due to their personal finances. They may not have the savings to fund the venture in full, and they have a poor credit score to get a good loan rate from a bank. The first step in building up your future company’s credit is to improve your own. There are many ways to increase your private credit score, and tradelines are one of the best methods. Here is everything you need to know about this venture, so you know if it is right for you and your business going forward.

Why Do You Need Business Credit?

Building up your business credit is nearly the same as building up personal credit. However, it is important to recognize that it is a completely separate system. Just because you have good personal credit does not mean it automatically transfers over to your company’s credit score. Having great personal credit merely helps you when you try to get the business off the ground initially.

Why Is Good Business Credit Important?

Your credit score is used by banks and private lenders to determine whether you are trustworthy with money. They look at your score, and from there, they determine how much of a loan would be good to give you. It also factors into what interest rates you qualify for.

The same idea applies to business credit scores. Your business will need to work with numerous partners and creditors to remain afloat, especially during the beginning of your tenure. If you need a line of credit opened up in the future, then your company’s credit score will tell a bank whether that is a good idea. Practically all businesses will need to use credit at some point, so you want to get started on the right foot.

How Can You Build Business Credit?

Similar to how there are plenty of ways to boost your own credit score, there are numerous ways you can help out your business. You ideally want to maintain a good credit history. That means if you take out a corporate credit card, you pay it off every month. Your company will also rely on utilities. You can speak with those organizations to see if your prompt payments with them can go toward your score.

With that in mind, you should remember that businesses open themselves up to numerous detriments. Liens, collections or judgments against your business will not work in your favor. You also want to make sure you do not maintain a high credit utilization. Your credit card may have a limit of $10,000, but you want to only spend about $3,000 a month to keep it low. Naturally, your company will face an uphill battle when it first opens, but with the right techniques, you can stay on the right path.

What Are Company Tradelines?

Tradelines are incredibly useful for individuals who want to increase their credit ratings. Businesses can actually do the same. When a company first opens, it will not have much of a history. It may need access to loans, but the data just is not there for lenders to look at. Therefore, it can work in the company’s best interest to become an authorized user on another company’s tradeline. This can be a supplier or similar company in the industry willing to help you out.

Before you do this, it is critical you look into whether the tradeline you are interested in will, in fact, report to the business credit agencies. They may not always do this, so always triple check. In the event the vendor will not report, then you may need to pay an additional fee to Dun & Bradstreet to verify the information. You also want to bear in mind that to qualify for these tradelines, you will likely need to show your own positive credit history. This may require you to set up a personal tradeline first before you pursue the business one.Tradelines have really come into vogue in recent years for individuals and businesses alike. If you think it would be right for you, then get in touch with Coast Tradelines. We would be more than happy to answer any questions you have about the process, so you can be confident you will benefit.