Don't Pay for Trade Lines

Any company who is requiring that you pay for a credit line at a business unrelated to their own is putting your business at extreme risk.  Not only could those trade lines be removed from your D&B®profile, but your business can be downgraded and your business credit could be frozen or permanently destroyed in the process.  This could also impact any other businesses you may have or plan to have in the future.

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If you are working with a company who is requiring that you “purchase trade lines” for your business credit profile, you are being ripped off.

 

Hundreds of businesses offer lines of credit for small businesses, with their only requirement being that your company has a complete D&B® profile.  Unfortunately, there are unscrupulous businesses who are selling “trade lines” for outrageous prices, many of which are being also paid to be affiliates for those same companies, meaning they are making money off both ends of the deal.

 

The key to being able to get credit lines isn’t in how much you pay to get them, but how credible your business is.  And, for that, creditors look to Dun & Bradstreet® for solid history, scores, and risk ratings.  If you want your business to stand on its own merit and achieve the trade lines and future credit approvals, you have to start at the beginning.  

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Using Trade Lines to Build Scores

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The basics...

 

Trade lines are vendors or suppliers who extend your business general retail credit accounts based solely off the fact that they can verify your business is active and functioning.  Most, but not all, do this by verifying your business information against D&B's database.  By simply having a D&B file, your business qualifies for a basic line of credit.  How you use that line of credit will determine how much it will impact future credit approvals.  Use the credit line wisely and you'll be rewarded with additional opportunities.  Be irresponsible and you could find yourself facing challenges in the future.

 

The term "trade lines" comes from the premise that a specific supplier would be generally associated with your specific industry, or "trade".  There are some things that are a given... but, for now, let's just focus on these four business types...

 

·         A plumber will likely use trade lines from a plumbing supply warehouse, a local home improvement store, or even an online HVAC supplier.

·         A local family restaurant will have multiple food purveyors as their trade lines, but also restaurant furniture retailers, kitchen equipment companies, a linen supplier, and maybe a dishware manufacturer.

·         Trade lines for a computer tech will likely include large-scale computer manufacturers, but also part wholesalers, software companies, and even a company that provides peripherals.

·         A small home-based house flipper will have a vast assortment of trade lines, such as building materials, discount appliances, an A/C guy, a landscaper, and a vendor for the tools he needs to get the job done.

 

Alternate opportunities...

 

At the same time, though, all four of these diverse businesses are also going to have certain suppliers in common.  For instance, they may all buy their office supplies from Office Depot®, or business cards from Vistaprint®, or tires from Firestone®.  Without knowing it, they may all use the same local bookkeeping service, pest control provider, or marketing service.  On any given day, you might find a UPS® truck parked in front of all four businesses.

 

What many small business owners don't understand is that trade lines don't have to be directly related to your specific trade.  Any business that sells or services another business can be considered as a trade line even though their customers aren't delegated to any specific trade or line of business.  And each of those suppliers might be able to report your payment history to your corporate credit report even if they aren't a part of D&B's automated reporting process.

 

Using your existing trade lines...

 

Any one of your suppliers has the potential to boost your scores and ratings up to 90% simply because you have two required elements in place: an account with them and a D&B business credit report.  Your payment history can get added in one of two ways: either A) your supplier auto-reports payment history to D&B, or B) you manually submit your trade references to D&B and have them manually contacted.  

 

Since you have already spent money with these suppliers, this is usually the fastest way to get the payment history into your D&B file, however, it comes with a cost.  D&B charges $159 per month for a Creditbuilder® service, so you will want to have your list of suppliers ready before you contract the service.  You'll need their business name, address, phone, and your account number ready when you submit the list to D&B.

 

There are hundreds (if not thousands) of businesses that report all of their business-to-business transactions to Dun & Bradstreet® automatically.  Chances are good that you are already doing business with a few of these companies, which is why it is so important that your business name, address, and phone number on your account matches exactly with what is showing in your D&B file.

 

If you have accounts with auto-reporting suppliers but haven't used them in a while, it's time to re-order.  Payment history only stays in the file for 24-28 months, so keeping your payment history fresh can boost your scores significantly because it shows multiple transactions and a dedication to prompt payment habits.  Even previous poor payment history can benefit from a new, promptly paid reorder.

 

Creating new trade lines...

 

If your business doesn't have any credit history, create new trade lines with companies when making purchases for your business.  Even online accounts that allow your business to make purchases on a prepaid or net terms basis can be very beneficial because they provide proof of activity to the corporate credit bureaus with every business-to-business transaction.

 

In general, most of these purchases in the business name will not require a personal guaranty or a hard inquiry on the personal credit file.  And because many of these companies report automatically, the payment history flows directly into the credit report without requiring the trade line be added manually through an expensive Creditbuilder service.

 

Contractual agreements between D&B and their trade suppliers prohibit either company from admitting they are a part of the auto-reporting process, so it will do no good to ask.  Our extensive list of confirmed auto-reporting vendors comes from years of experience of watching known interactions flow automatically through the systems in place.  Even so, new suppliers get added to our list on an ongoing basis.

 

If you have been struggling to build strong scores and ratings, try using (and re-using) the suppliers you have come to trust, but also take the necessary steps to build new and expanding relationships outside the local comfort zone.

 

Buyer beware...

 

You should be very wary of any company that is offering to "sell" you trade lines to get payment history into your file.  Purchased trade lines go against every acceptable practice with the corporate credit bureaus, including D&B.  The techniques these companies use will cost you plenty, will raise eyebrows at the bureaus, and will usually cause your company to face an in-depth investigation.  In most cases, the payment history will be discarded and your credit scores, and future potential credit, will be permanently downgraded.

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10 Most Common Mistakes When Adding Trade References

 

10 COMMON TRADE LINE TRIP-UPS

 

PAYING FOR TRADE LINES – Opening a business credit account with any company is free.  If you are dishing out your hard earned cash to "buy trade lines", you are being ripped off — and it can hurt your business.  Companies who sell trade lines are constantly being identified by D&B, and when they are, their customers are the ones who suffer.  While they move off to start a new company under a different name and take other people's money, your company will be forever burdened with the stigma of using fraudulent tactics.

 

TRIPLE VISION TRADE – Variety is the spice of life (and the recipe for success!)  Most companies will have a few suppliers they use for their regular purchases and they'll add additional suppliers over time.  While you may need one (maybe two) office supply vendors, nobody spends all their money buying green highlighters and Post it! notes from multiple suppliers.  Not even office supply stores do that!  So why would your ONLY suppliers be in any one industry?

 

TRADE LINES OUTSIDE YOUR TRADE – Yes, everyone IS going to need office supplies at some point, but your business is also going to spend on the things it needs to run your business.  If you are a tire store, you'll be buying tires, tools, and equipment.  If you're a restaurant, you'll need food, dishes, tables, and napkins.  If you are a truck driver, you'll need parts, repairs, licenses, and fuel.  Purchases should reflect your line of business.  While the owner of a tire shop may purchase employee uniforms at a specialty store, he most likely doesn’t need a trade line that sells food.  Likewise, a mom-and-pop restaurant has their usual shopping list, but is probably not going to spend $1000 for an emergency tool kit for the kitchen.

 

DAY-TRADING – Who never shops for their business all year long and then suddenly opens a dozen new accounts in one day?  Only people who are using some ding-dong's cookie-cutter, flash-in-the-pan strategy.  Most of those new "accounts" are going to check your D&B report (or other corporate credit bureau) to validate your business details. If no one has run a single report on your business in the past three years and then suddenly there are 10 inquiries in one day — every red flag is going up, every alarm bell is clanging, and every idiot-light just came on.

 

ADDRESSING TRADES – a realtor who ordered products from six trade lines and had each of the orders shipped to a different empty house he managed. Instead of the payments appearing a month later in one D&B report, he ended up with six D&B reports, one for each address.  He spent all that money, and for nothing!  He thought he was being tricky, but instead, he was the one who got tricked. Your company operates under one name, usually at just one address, and that is the ONLY acceptable information when placing orders with your suppliers. Trade lines should be established in your business name, at your business address, and shipped to your business location.

 

TRIVIAL LITTLE TRADES – Most business credit bureaus have a set minimum payment reporting criteria.  Most companies who report to those bureaus will also have their own minimums.  In most cases, if you are spending less than $50 with your supplier, that payment is never going to make it into your report.  Some suppliers don't report any payments under $100, and some $1000.  So don’t waste your $12.35 thinking you're pulling a fast one, because you're not.  If you can’t afford to spend the minimum, you might as well not make the purchase at all.  If you are really buying something your company needs, chances are it's going to cost more than fifty bucks.

 

TRUST YOUR OWN TRADE LINES FIRST – If you have a legitimate business, you are already paying legitimate expenses associated to that business.  Those expenses are real, and their coming from your real trade lines!  Most of the cookie-cutter quacksters won’t even take the time and energy to look at your existing trade lines and vet their potential to get added to your file because that doesn't fit into their one-size-fits-all "technique".  Most of the time, you have already spent a lot more with your legitimate suppliers than you would be willing to spend on someone else's fake ones.

 

TRADE LINE OOOPS! – The purpose of adding a trade line is to demonstrate your bill-paying responsibility.  If you purchase on Net terms from a qualified supplier, be sure to make your payment on time.  A failed or late payment, no matter what the reason, will negatively impact your scores and ratings and put you further behind.  You can always reverse any negativity by making new purchases that you DO pay on time, but it's so much easier just to pay it right the first time!

 

TRADING PAYMENTS – Who’s paying the payment on your trade line?  All business purchases must be paid by the business itself, using the business (not personal) bank account or credit card.  And (even worse) if someone else is paying your bills, your payment habits are a reflection of how well THEY pay the bills, not your company.  If these kinds of risky practices are discovered, not only will D&B remove the payments from your file, but they could also block you from being able to add payment history in the future.  Just please remember... your company needs to pay its own way.

 

TRUTH IN TRADING – Do not believe tricksters who offer flash-in-the-pan strategies to get trade lines added to your file.  Most of the techniques they will sell you are not accepted by the major business credit reporting agencies.  Thousands of businesses each year fall prey to these tactics, and they don't usually come out on top for their bargain.  You will lose a lot of money and waste a lot of time in the process.  Don't fall for schemes that sound too good to be true.  If you have to look over your shoulder to see if you are about to get caught doing something wrong, you ARE doing something wrong.  And the last thing you want to do is add your company to their long list of failures.

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