Do You Know About Trade References?

Trade references are like financial references for your business. Most business credit applications ask for 3 such references. Find out about trade references.

Dun & Bradstreet

Dun & Bradstreet also lets you add these kinds of references to your D&B report if you sign up for their “Credit Builder” program. This is unique to D&B and is a “value added” service for enhancing the usefulness and attractiveness of your business credit report to lenders.

Why Are Trade References Important?

Trade references are important because they give banks a clearer picture of how you manage your business finances.

Commercial credit reports do not normally list them. And they are often from companies who do not usually report credit except in negative circumstances. This is with the exception of companies which use D&B’s Credit Builder.

In other words, the companies that you list as trade references often won’t be reporting any payment experiences on your business credit report. So, these are commonly suppliers or vendors.

Subjective Information

What this means is that these types of references serve to give lenders a look at how your business performs. And this is off of the official credit record, so to speak.

They can be seen as an extension of your business credit. While not normally on a credit report, they are just as important as the information which is on your business credit report.

Banks will check these kinds of references. And they will get information on each reference. This is data such as the length of time the account has been open, how many times you have paid late, and what the credit limit is.

Which Companies or People Can Be Trade References?

What or who you list as a trade reference?

When filling out a loan application, it’s a good idea to use such references. And they can come from both outside and inside your industry.

Companies that you have to pay usually aren’t acceptable as these sorts of references. For example if you fail to pay your rent or your electricity, there are immediate consequences.

For most companies, these core services are the highest priorities for payments. And they are the least likely to reflect negative payment experiences.

Which Companies Are Best for Such References?

More likely candidates are vendors and suppliers who your company pays on time. This is even though they could in theory be put off for some time without consequence.