Build Business Credit In 30 Days
FREQUENTLY ASKED QUESTIONS
ABOUT NET-3O TRADELINES OF CREDIT
What is a Net-30 tradeline of credit?
A Net-30 account is one that extends you 30 days to pay the bill in full after you have purchased products. It's vendor credit that allows you to buy now and pay later. Vendors that report those payments to commercial credit agencies help your company establish business credit.
When is your payment due?
Net-30 payments are due and payable anytime within 30 days after the purchase is made.
Do you have to wait 30 days to pay your bill?
No. You can pay before your bill is due. Your payment activity will be reported according to the reporting schedule of the vendor where you have established this account.
I see DBT on my credit report what does this mean?
Days Beyond Terms is a dollar-weighted average number of days beyond the contractual due date that a business pays it bills.
What is revolving credit?
Revolving credit is a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time. With revolving credit, the amount of available credit, the balance, and the minimum payment can go up and down depending on the purchases and payments made to the account and the customer’s cash flow needs.
What is a non-revolving credit?
The main difference between revolving and non-revolving credit is that it can't be used again after it's paid off.
Can I use a Net-30 tradeline of credit at other places?
When you get approved for a Net 30 account it can be used to purchase products from that vendor only. A Net-30 account is not like cash or a credit card you can use anywhere that accepts it. If you are interested in opening separate Net-30.
BENEFITS OF A NET- 30 TRADELINE OF CREDIT
Strong business credit can help business owners secure better interest rates on loans, lower circumstances where you need to prepay for a specific product or service, and secure better trade terms.
· Net-30 accounts allow you to start establishing a credit for your business without putting your personal credit at risk, which will lead to greater financing opportunities.
· Net-30 tradeline will help you save money and access the funds or assets you need to help your business grow.
· As you establish more Net-30 accounts reporting on your business credit reports, you establish a credit rating for the business. An established business credit report may help you qualify for other types of credit, for example, store credit, gas cards and other financing opportunities.
THE TOP BUSINESS CREDIT AGENCIES
You want to work with vendors that report to either one or more of the four major business credit agencies:
1. Dun and Bradstreet - D&B is the largest business credit reporting agency. The
D &B company works by issuing a PADEX score that is based on a DUNS rating which ranges from 1 to 100 and evaluates how well a company paid its bills in the prior year. Higher scores mean better payment history.
2. Experian Commercial - Experian provides business credit evaluations as well as credit reports. Their system, known as SmartBusinessReports, is responsible for assigning a business credit score that the company refers to as Intelliscore. Scores range from 0 to 100, with higher scores representing a lower (better) risk.
3. Equifax Small Business - It uses this data to assign different scores, like a business credit risk score, which ranges from 101 to 992. It predicts the likelihood a business will become 90 or more days delinquent over the upcoming 12 months. Equifax also generates a business failure score, which ranges from 1,000 to 1,610 and predicts the likelihood of a business going bankrupt within the next 12 months. A lower score indicates higher risk.
3. Credit Safe- Creditsafe is one of the most used provider of business credit reports and owner of the world’s largest business to business credit rating database. Credit safe measures a business’s risk rating by reviewing payment performance in the next 12 months.
What are your next steps after establishing a Net-30 tradeline of Credit?
Use your Net-30 account regularly so it will show an ongoing payment history. For example, when you receive a Net-30 credit line, you need to make purchases from that vendor each month for at least a period of one year. The length of payment history you have will play a significant role during every credit review process.
Always pay your invoices on or before the due date. Paying your bill early you may help to build your business credits score more quickly.
Create vendors accounts that you can use more consistently and work to increase your credit limits with Net-30. Don’t buy products that you cannot use. Do not exceed your credit limits and do not carry excessive debt on your vendor accounts.
Check your credit reports and scores regularly with more than one major credit reporting agency to find out whether your accounts are helping your scores, and if not, consider adding additional credit references. You should also examine if your credit reporting and activity is accurate.
