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What are Business Tradelines?
Small, young businesses often find it difficult to finance the costs of running their day-to-day operations. When the business owner’s own personal savings dry up, the only option is to apply for business credit. However, business credit is often difficult to attain when a business has no credit history. This problem is almost impossible to remedy, which sends many new business owners searching for funds from private investors, credit cards, or other not so desirable options. One option that business owners can use, although they may not be aware of it, is a business tradeline.
In all credit situations, tradelines are items, usually favorable items, which are added to a credit report. In a personal consumer situation these may be mortgages, which are considered a favorable type of credit. Consumers who are looking to increase their credit scores can add former mortgages to their credit history to boost their overall credit score. This shows that the consumer has successfully paid a loan over a long period of time.
How does this translate into a business situation? Business tradelines are lines of credit or other forms of credit from established businesses. These businesses will sell portions of their credit to new businesses to help them raise their business credit score. The new business cannot use the line of credit, but they can have it on their credit report. For instance, a young business owner can purchase the right to become an authorized user on a credit line for 120 days. After 30 days the credit line will show up on the business owner’s credit report. Then the business owner has 90 days in which he can apply for a loan or other form of credit. He has, in effect, purchased a temporary boost for his credit score. The tradelines that are sold in this manner are usually two years old or older. This makes them “seasoned” in the eyes of lenders.
Is the buying and selling business tradelines legal? There is not a law that prohibits this method of increasing business credit scores. In fact, this practice is quite common and has been used for many years for small businesses, first time homebuyers, and even those going through bankruptcy to increase their credit scores to a level that is sufficient to qualify for financing.
The cost to purchase a business tradeline is not something to be taken lightly. The cost will vary based on how seasoned the tradeline is, but a well-seasoned tradeline can cost several thousands of dollars. This is only an option for a small business owner that still has some collateral to invest. However, by purchasing a business tradeline or two, the business owner can increase his borrowing capacity immensely. Sometimes this is the only feasible option to the cash crunch that is an inevitable part of starting a business.
If you feel that a business tradeline is what your business needs to succeed, take some time to find a quality company selling them. There are many tradeline scams out there, and falling prey to one of these will only serve to hurt your business. However, if you can find a quality company willing to sell a tradeline, you can increase your credit and get the financing that you need.
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credit scores are determined by tradelines 
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