What are business tradelines & how to use them to build business credit

If you’re trying to establish business credit, you’ll likely come across the term “tradelines”. They can one of the top tools for building business credit quickly, even if you don’t have good personal credit.

How do tradelines work, and what’s the best way to use them to establish business credit? We’ll answer both questions here and give you the tools you need to build credit with tradelines. 

What is a tradeline?

In the credit world, tradeline is another word for accounts that appear on credit reports. It's usually associated with business credit, though it can also be used to describe accounts that appear on personal credit reports too. 

Each account listed on your credit report is a tradeline. Most include information about the type of account, the creditor (though the names of creditors aren't typically listed on business credit reports), the credit limit or recent high balance, current balance, and payment history.

Business vs. consumer tradelines

The key difference between business and consumer tradelines is which credit bureaus get the information:

• Business tradelines report to commercial credit bureaus (Experian Business, Dun & Bradstreet, Equifax Small Business) and can affect your business credit scores
• Consumer tradelines report to personal credit bureaus (Experian, Equifax, TransUnion) and can affect your personal credit scores

How tradelines help build business credit

Payment history is the top factor that impacts credit scores. Accounts that are paid on time are a top factor in building business and personal credit.  Without this information, it’s very hard to calculate a credit score. 

Many suppliers and vendors offer payment terms to their business customers. Net-30 terms lets business pay in 30 days, for example, while net-55 terms gives the business 55 days to pay the invoice. 

When a business gets credit through a vendor, pays on time, and the account is reported to their business credit report(s), that tradeline can help build business credit. 

Of course, on-time payments are key here. Late payments can hurt the business's credit scores.

Experian Intelliscore Plus weighting

The Experian Intelliscore Plus^sm score is Experian’s business credit score. 

There are currently three versions:

• Intelliscore Plus (original 1-100 scale)
• Intelliscore Plus V2 (1-100 scale)
• Intelliscore Plus V3 (300-850 scale)

This score can evaluate over 800 data points, but these top factors drive most scores: 

• Trade experiences/payment history is the most significant category and reflects your company's payment history with its vendors and suppliers. The model analyzes the number of trade experiences, outstanding balances, payment habits (such as Days Beyond Terms or DBT), credit utilization, and payment trends over time.
• Public records include major red flags like collections, tax liens, judgments, and bankruptcies that can significantly damage your score. 
• Credit utilization examines how much of your available credit you're using. Credit lines with high balances can be a sign of risk. The system also compares delinquent account balances against your total credit limits to gauge overall financial health.
• Company demographics (firmographics) is background information about the company itself. Factors such as the number of years the business has been in operation, the number of employees, and the industry classification (via SIC or NAICS codes) may be considered. Some industries are inherently considered more riskier than others, which can affect the baseline score.

Learn more: The Experian Intelliscore Plus credit score explained: definition, ranges, & how to improve

D&B PAYDEX and dollar-weighted invoices

The D&B PAYDEX^® score runs from one to 100, with 100 being the best possible score. 

• You need at least two active tradelines with three payment experiences reported to get a PAYDEX score. 
• PAYDEX uses two main factors to calculate your score: recent payments matter more than old ones, and bigger transactions carry more weight than smaller ones. This means if you pay a $10,000 invoice on time this month, it impacts your score more than a $500 payment from six months ago. This approach gives lenders a real-time view of how you handle major financial commitments.

Learn more: Dun & Bradstreet PAYDEX® Score: What is it & how to improve yours

Types of business tradelines

You'll likely come across terms used to describe different types of tradelines. Here's what they mean.

Primary tradelines

Primary tradelines are those you obtain as a consumer or business owner yourself. In other words, you apply for credit, are approved and the account reports. This is the most basic way to build credit, whether you're trying to establish business credit or personal credit.

Secondary tradelines

Secondary tradelines, also known as authorized user tradelines or "piggybacking" are accounts where you're added to someone else's account. These are not typically used in the context of business credit, but are somewhat popular in consumer credit.

Seasoned tradelines

Seasoned tradelines are accounts that have been opened for some time, often a year or more. These are popularized by certain types of credit repair organizations that may sell access to tradelines. Since older accounts can help build credit scores, some individuals see these as a shortcut to building credit, though they are not without risk.

Tier 1 vendors

Tier 1 vendors is a term that’s often used to describe vendor or supplier accounts that are easy to get, even if the business doesn’t have an established business credit history. Tier 2 vendors often require applicant’s business credit reports list at least 3-5 accounts reported with a good payment history. (Each vendor has its own credit requirements.)

Net-55

You may see references to net-55 tradelines for building business credit. Most vendors or suppliers will not directly offer payment terms that allow the business to pay in 55 days.

Instead, it usually refers to a strategy where the business owner gets revolving credit accounts that report (like fuel cards or business retail cards) and then time their payments to give them up to 55 days to pay.

Installment loans & equipment leases

Installment loans and equipment leases can help build business credit. Here are some key pros and cons: 

Timeline: how fast will a new tradeline raise your score?

Yes it is possible to establish business credit fairly quickly by obtaining trade lines and making payments on time. For example:

Some customers who used Nav's detailed credit reports with tradeline reporting saw an increase in business credit scores up to 50% in the first 3 months. Of course, individual results will vary and are not guaranteed.*

But credit building in general takes time. Be aware there are some limitations you’ll encounter. Here’s the normal process for reporting tradelines: 

Day one to nine: Secure at least two tradelines that report to business credit bureaus, make purchases, and pay before the due date. 

Day 10–90: Vendors report first invoices to business credit bureaus  

Day 90–120: PAYDEX score appears when 3 experiences post to the credit report; other credit scores often generate within this time period as well. 

Day 120+: Continue to pay on time to build a credit history. Add new accounts as needed.

It may take 30 to 60 days or even a bit longer, for new accounts to appear on your business credit reports for example. New consumer credit accounts (like credit cards, mortgages, or auto loans), typically begin reporting the next time the lender supplies information to the credit bureaus. That usually means you'll see these new accounts within a month or two on your credit reports.

Be patient. If you don't see new accounts on your business credit reports after 2 months, contact the company that offers the tradeline to find out whether there may be issues matching that account with your business information.

Credit scores are complex and different credit scoring models will treat new tradelines differently. Your individual results may vary.

Net-30 vendors that report to business bureaus

Your goal may be to build business credit quickly. Understand that there are some limitations that you may encounter. (See the timeline in the next section.)

Nav’s net-30 vendor list can help you find vendors that report to business credit. 

How many tradelines do you need?

Most business owners who are building business credit from scratch will start with 2-3 tradelines to initially establish credit and then work their way up from there, depending on their goals and need for credit. 

There’s no perfect number that every business owner should aim for, but here are a few guidelines for getting started

Source: Nav

These are just the minimum number of accounts required. One account is unlikely to get you a high credit score, but it is the starting point. 

For many business owners, getting 2-3 accounts initially, paying those on time, and then adding additional accounts over time is a solid strategy. 

Tradeline pitfalls & scams to avoid

There are several potential pitfalls when it comes to tradelines:

Not all vendors report

It can be difficult to find out exactly which tradelines report to each credit bureau. Business credit reports don’t list the names of companies reporting individual accounts so it can be hard to figure out which one of your accounts reports, and which ones don’t

Seasoned tradelines

Seasoned tradelines are accounts that have been open for a while, usually at least two years. Some companies “sell” seasoned tradelines. Usually this means paying to get added as an authorized user to someone else’s account. 

It can be expensive, and you don't have the same level of control that you do if you establish your own credit tradelines. Also, purchasing seasoned tradelines can pose legal and financial risks and is not recommended for business credit building.

And it usually doesn’t work that well on the business credit side, because your business is not the company getting the account. There is a significant amount you can accomplish without purchasing tradelines from strangers. If you're trying to build business credit, consider vendors that help build business credit or Nav Prime with tradeline reporting. For consumer credit, consider a secured credit card, or a credit builder loan instead. 

Personal guarantees

Some accounts may require personal credit checks and/or personal guarantees (PGs). Younger and smaller businesses can’t always avoid PGs, but make sure you are prepared to pay back the balance if your business can’t. 

High fee brokers

Some companies offer expensive credit packages. Again, there is a lot your business may be able to do on its own. If you need more help, consider Nav Expand with Prime, which includes a dedicated business credit coach. 

How to remove negative tradelines

If you find mistakes on your business credit reports, you’ll need to notify each commercial credit bureau who is reporting the incorrect data about your company.

Here’s how to file disputes with the major commercial credit bureaus: 

• Experian: Follow the instructions here.
• Equifax: Call (888) 407-0359 or email at cust.serv@equifax.com.
• Dun & Bradstreet: Sign up for the free D-U-N-S Manager online service here.

Adding authorized user tradelines

Both business credit and personal credit are important when it comes to small business loans and financing. Many small business lenders check the owner's personal credit, especially when the business is newer, or doesn't yet have significant revenues or employees. 

The strategy here applies primarily to building personal credit, as it's not commonly available for business credit. 

Process for becoming an authorized user

Ask a friend or family member to add you to one of their credit card accounts as an authorized user. The account holder will contact their card issuer online or by phone to add the authorized user. As an authorized user you do not have to actually use the card yourself. 

When you are added as an authorized user, that account typically then appears on your personal credit reports. It will likely be identified as an authorized user account but it can still help toward building good credit scores, including FICO scores or VantageScore credit scores. 

For example, if your sibling adds you to their credit card account that they have held for five years, you will typically benefit from that entire payment history.

Accounts with a long established payment history, on time payments, and low balances in comparison to the credit limit make up the ideal authorized user tradelines to add to your credit files.

The risk is that any negative information associated with that account will also appear on your credit report and it can be difficult to remove. For example, if your sibling falls behind on payments or if they start carrying a very large balance in comparison to the credit limit (known as a high credit utilization ratio), your credit scores could suffer.

Purchasing authorized user tradelines from strangers comes with risks, and it can be expensive (hundreds or thousands of dollars). 

Combining with other credit-building tactics

You can combine tradelines from suppliers and vendors with other types of credit building to establish good business credit. Each can be part of a strategy to build credit and manage business cash flow.

For example you can use any combination of: 

• Vendor accounts 
• Nav Prime 
• Business credit cards and/or 
• Business loans

Pick the right strategy for the right stage of your business. A startup might have trouble getting a business loan, for example, but may qualify for a business credit card and vendor accounts. A more established business that doesn't have a need for vendor credit may use business credit cards and business loans.

And either type of business can benefit from Nav Prime with detailed credit reports and tradeline reporting.

Tradelines vs. business loans

Small business loans can be a great way to build business credit. If the loan or line of credit is reported to business credit reporting agencies (many are), it can provide another tradeline.

Pros and cons of tradelines vs business loans

Source: Nav.com

When to use tradelines vs. loans

Here’s one way to think about tradelines versus business loans for credit building.

Loans can be a good choice when your business needs to borrow. One exception is a line of credit. It can be helpful to secure a line of credit for needs that come up quickly or unexpectedly, and you only pay interest on the amount you borrow. 

Tradelines can be used to build credit whether or not your business needs a loan. Pay in full by the due date and you’ll typically avoid interest, depending on the provider’s terms. 

Frequently asked questions