What are trade references?
Short answer: In this guide, a trade reference is a vendor that your business pays, who can say how you pay.
Reviewed by the Red Spectrum Customer Support Team. Last reviewed .
What the words mean here
We looked for a primary source that defines "trade reference" in one sentence. We did not find one we could quote word for word. So the meaning above is our own working meaning for this guide. It is not a rule from any agency.
With that said, the idea is simple. Your business buys from a vendor. You pay the bills. Later, someone asks the vendor, "Does this business pay?" The vendor's answer is a reference.
Who can give one
A trade reference comes from a vendor that has sold to your business. A friend or a family member is not a vendor. A company you have never bought from has nothing to say about your payments.
That is why the first step is a vendor account. See what is a net-30 account.
What a vendor may ask
Each vendor decides this for itself. Some may ask for the business name, the address and the phone number. Some may ask for a contact person. We cannot say what any one vendor will ask. Read the vendor's own page, or ask the vendor.
A trade reference is not a credit report
A reference is one vendor speaking. A report is a record that a company keeps. The two are not the same.
Factiiv says, "Most business activities are not captured by traditional credit bureaus and do not end up on credit reports." That tells us that many things a business does may not show up in a report at all.
The FTC says, "Individual consumer credit reporting is covered by laws such as the Fair Credit Reporting Act (FCRA)." That sentence is about reports on people, which is a different thing from a business.
What a reference does not do
A reference does not mean a loan. It does not mean better terms. It does not mean anything at all about what another vendor or a lender will choose. We make no promise about that, and neither should anyone else.
A simple way to ask a vendor
- Pick a vendor you pay on time.
- Write or call the vendor.
- Ask if they give references.
- Ask what they need from you.
- Say thank you.
How Red Spectrum fits in
Red Spectrum is a membership. A member has a net-30 vendor account and spends it on real business services from our catalog. Every membership payment and every catalog repayment is reported to Factiiv. We report nowhere else.
No guarantee of funding, loan approval or credit scores. Payment activity is reported to Factiiv.
Questions people ask
Who can give a trade reference?
A vendor that has sold to your business. In this guide, that is what the words mean.
Is a trade reference the same as a credit report?
No. A reference is one vendor's answer. A report is a record kept by a company.
Will a reference get me a loan?
We make no promise about that. We do not promise funding, loan approval or credit scores.
Sources
- Factiiv · https://factiiv.io · checked
“Most business activities are not captured by traditional credit bureaus and do not end up on credit reports.”
- Federal Trade Commission, remarks on the small-business credit reporting study · https://www.ftc.gov/system/files/ftc_gov/pdf/remarks-of-chair-lina-m-khan-regarding-6b-study-of-small-business-credit-reporting.pdf · checked
“Individual consumer credit reporting is covered by laws such as the Fair Credit Reporting Act (FCRA).”
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