Updated: Jan 26
Believe it or not, most of the so-called web-based credit gurus who tout their claims with flashy ads and bold promises don’t realize the mistakes they are selling can doom your company to disaster. Or maybe they do know and just don’t care – so long as they can wrap their sweaty fist around more of your hard-earned cash.
The ignorance I witnessed during a recent 10 minute call from a so-called tradeline guru (quite literally) made me laugh out loud after I hung up on him. I learned more about tradelines in my first two weeks working at D&B then that man had in his whole box of Cracker-Jacks. It’s amazing how much money these people can make preying on the desperation of others.
Any business credit consultant knows the single, most-impacting action a business owner can take to better their profile is to prove positive payment habits by adding tradelines. However, the problem with adding tradelines to your business credit profile can be found in Newton’s third law – for every action there is an equal and opposite reaction. If you don’t do it right, all the benefits can be reversed instantly, and have devastating results. So instead of letting you fall into someone’s foolish trap, we’re going to outline some basic guidelines.
Trigonometry studies the lines and angles of triangles – our list of No-No’s can give you the right angle toward business credit success.
PAYING FOR TRADELINES – 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. In most case, you can get a tradeline from any company if you have a solid, well-rounded business credit profile.
TRIPLE VISION TRADE – Variety is the spice of life, and the recipe for success. Let’s say you own a tire repair shop. Do you really need to order highlighters from three different online office suppliers in one day? NO! While you may need one (maybe even two) office suppliers to help fill the gaps, nobody needs all of their vendors to be in the same industry. Even a highlighter store isn’t going to buy ONLY highlighters. A mom-and-pop restaurant may need a good degreaser, but they certainly don’t ONLY need degreaser.
TRADELINES OUTSIDE YOUR TRADE – Purchases should reflect your line of business. While our tire shop owner may purchase his employee’s uniforms at a specialty store, he most likely doesn’t need a credit line at a dress shop. He would more likely make purchases that relate to a tire shop. What he really buys are tires, tools, parts, uniforms, degreaser, and insurance. A mom-and-pop restaurant is going to need dishes, cookware, food, containers, seating, signage, menus, and maybe one lug wrench in the back storage room.
DAY-TRADING – The only people who open five tradeline accounts in the same day are people who are using a cookie-cutter or flash-in-the-pan strategy. Most of those creditors are going to run your registration through a corporate credit agency to validate your company’s existence and details. If no one has run a single report on your business in the past three years and then suddenly there are five in one day, every red flag in the file is going up. Every alarm bell is clanging. Every idiot-light just came on.
TRICKY TRADES – I once knew a realtor who ordered products from six tradelines and had each of the orders delivered to a different empty house he managed. Instead of the tradelines appearing on his company’s D&B report, D&B arbitrarily created six new reports for the six new addresses on file, with one tradeline appearing on each report. He spent all that money, only to find out later it was all for naught. He was the one who got tricked. Tradelines should be established in your business name, at your business address and shipped to a business location.
TRIVIAL LITTLE TRADES – Most business credit bureaus have minimum payment reporting criteria. Most companies who report to those bureaus will have their own minimums. Don’t think your tiny $2.13 purchase will get reported, because it won’t. If you can’t pay the minimum, you might as well not make the purchase at all.
TRUST YOUR OWN TRADELINES FIRST – If you have a legitimate business, you are already paying legitimate expenses associated to that business. Those are the tradelines you should be adding to your file to build your credibility. Most of the cookie-cutter quacksters won’t even look at tradelines you have already paid because they don’t want to waste the effort validating your existing vendors. Typically, most of your own tradelines can be twice as beneficial and in about half the time it takes to add just one of their so-called “trusted” tradelines.
TRADELINE TRIP-UPS – The purpose of adding a tradeline is to demonstrate 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 scores and ratings and are almost impossible to get permanently removed from your file.
TRADING PAYMENTS – Who’s paying the payment on your tradeline? All business purchases must be paid by the business itself, using a business bank account or credit card. If someone else is paying your bills, your payment habits are a reflection of how well they pay the bills, not your company. Your company needs to pay its own way.
TRUTH IN TRADING – Do not believe tricksters who offer flash-in-the-pan strategies to get tradelines added to your file. Most of the techniques they will convince you to use are not accepted by the major business credit reporting agencies. Thousands of businesses each year fall prey to their tactics and lose a lot of money in the process. Don’t become another of their statistics.
LESSON: There are lots of ways to get tradelines added to your business credit profile so your can build a secure and strong foundation for your future, and you don’t need trigonometry to get you there. We understand the risks associated to the No-No’s above and have seen the damage these kinds of tactics leave in their wake.