How to get a business credit card with bad personal credit

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Dear business joke,

I want to start a business, but I have bad credit. What are my options? – James

Dear James,

While an impressive credit history and high credit scores aren’t necessary to start a business, they certainly help! After all, you may soon want to borrow funds from a financial institution so that you can do everything from paying the costs of a launch to managing ongoing operations.

To use a lender, your credit history will be relevant. Fortunately, you can overcome the problems associated with bad credit to qualify for a business credit card and loan as it may be necessary as well.

Have a business question for Erica? Send them a message on the Ask Bankrate Experts page.

Build your score

Since your business has not yet started, you do not have a business credit profile that can help you qualify for credit products. Therefore, lenders will assess your personal creditworthiness to determine qualification and set terms.

To find out what is driving your credit scores down, go over your credit reports. You can get a report from each of the three credit bureaus — Experian, TransUnion, and Equifax — once a year for free from annualcreditreport.com.

The information listed in the Business Lines, Public Records, and Credit Investigations sections of your credit report are all entered into scoring templates, so read your reports carefully. If you spot any inaccuracies, file a dispute with one of the credit reporting agencies. The one you use will notify the other two, and your files will be updated.

To improve your scores (even when negative data is still listed):

  • Pay all credit accounts on time. Although late payments hurt credit scores (especially when there are a lot of them or the accounts are seriously overdue), establishing a perfect payment history from this point on will help repair the damage. .
  • Reduce credit card debt. If you have credit cards and they are at their max, reduce the balance well below the credit limit.
  • Open a credit card. Consider opening a personal credit card. Many credit cards are created specifically for people with bad credit. Once you have it, choose a small bill to invoice each month, then pay it in full and on time.
  • Add utility and cell phone accounts to your report. The more on-time payments you have on your credit report, the better. Experian has a free To reinforce program where you can add non-credit accounts to your file. These payments should help give your FICO 8 credit score at least a few extra points.

With this strategy, your credit score will increase over time.

See linked: Do i need a business credit score to start a business?

Get a business credit card

While you can use a personal credit card for your business, it’s best to get one specifically for your business. They offer benefits designed to help business owners do everything from managing their business’s expenses to helping with accounting.

Just be aware that these cards remain your personal responsibility. Even if it’s on behalf of your business, you will be responsible for all payments and any unpaid debt.

So how can you get a business credit card with bad personal credit? When your scores are at least in the “right” range, start exploring the business credit card options available. As you’ll see, there are plenty to choose from, so give this task plenty of time.

Be aware that some business cards are payment cards while others are credit cards. With a charge card, there is no preset limit, but you will have to pay the entire balance within approximately 30 days. With a credit card, there is a maximum amount you can charge, but you can pay at least the minimum payment requested and then run the rest. Ultimately, you might want one of each.

When your scores are at least in the “right” range, start exploring the business credit card options available.

Almost all business cards have rewards programs associated with them, so read the program details and focus on which ones you will be using. For example, if you think traveling will be in your future, focus on a map that gives you the best benefits for flights, airport amenities, hotels, and car rentals.

Many business credit cards also offer great signup bonuses, where you would receive a large amount of points, money, or miles after spending a certain amount with the card within a few months of activation.

Some also offer 0% APR for a fixed number of months, which will give you a good amount of time to pay for your business needs before finance charges are assessed. As long as you pay off the debt in full before the actual rate starts, you get a free loan! As you use the card, you accumulate rewards.

These programs differ, so make sure it’s a good match. One card can offer exceptional reward value for restaurant meals, while another offers the most for things like office supplies.

Finally, be prepared for annual fees. Not all cards charge for them, but if you get the most out of the account in terms of perks and rewards, you will have the edge. Choose wisely.

Learn about loans

Credit and charge cards are generally ideal for short-term financing, while business loans are best for large expenses that you want to pay off over several years.

To get a business loan on the best terms, it’s best to wait until your credit is in good condition. However, if you need to borrow a large amount of money immediately and then pay in equal installments, there are business loans for bad credit startups.

Loans without a credit check still go through an approval process, but the lender analyzes your assets and income for approval instead of your credit history. If it appears that you can make the payments associated with the loan, the loan must be approved. Other lenders check credit reports and scores, but qualifying standards are low.

In either case, loans developed for people with bad credit tend to be smaller and carry higher interest rates than those intended for people with good credit.

Whatever loan you get, just pay it back according to the agreement. Assuming the lender provides information to the credit reporting agencies (most do, but if you get a “no credit check loan” ask the lender to be sure) this will help your credit scores down. to augment.

Follow these simple steps and not only will you fix your bad credit, but you will also have the right credit products for your business!

At the end of the line

To qualify for a business credit card (and a business loan), take steps to improve your personal credit history.

Change your FICO score, identify the right business card for your needs, and consider a business loan.


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