How to get a business credit card with bad personal credit
While an impressive personal credit history and high credit scores are not required to start a business, they certainly help. Finally, you may soon want to borrow funds from a financial institution to cover everything from paying for launch costs to managing ongoing operations.
To appeal to a lender, your past credit history will be relevant. Fortunately, you can overcome the problems associated with bad credit to qualify for a business credit card – and a business loan, as it may also be necessary.
Build your personal credit score
Since your business is yet to start, you don’t have a business credit profile that can help you qualify for personal credit products. Therefore, the lender will evaluate your personal creditworthiness to determine eligibility and set terms.
To find out what’s dragging your credit scores down, pull up your credit reports. You can get reports from three personal credit reporting agencies — Experian, TransUnion and Equifax — for free once a year at AnnualCreditReport.com.
Information listed in the trade lines, public records and credit inquiry sections of your credit report is input into all scoring models, so read your reports carefully. If you notice 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 credit score (even when negative data is still listed), make sure to:
Pay all credit accounts on time. Although late payments can damage credit scores (especially when there are many or the accounts are seriously delinquent), establishing a thorough payment history beyond this point will help repair the damage.
Reduce credit card debt. If you have credit cards and they are maxed out, reduce the balance below the credit limit.
Consider opening a credit card. Consider opening a personal credit card. There are many credit cards for people with bad credit. Once you have the card, choose a small bill to charge each month, then pay it off in full and on time.
Add utility and cellphone accounts to your report. The more on-time payments you make on your credit report, the better. Experian has a free Boost program where you can add non-credit accounts to your file. Those payments should help give your FICO 8 credit score at least a few extra points.
How to get fast approval on a business credit card
To get fast approval on a business credit card application, good to excellent credit is essential. If you’ve been in business for a while and can show your annual business income, these factors will also help (as they do with all business credit cards).
Some card issuers let you pre-qualify, which is usually a quick process that lets you know if you’re likely to be approved. You’ll still need to go through the formal application process, but if you’re in a hurry, pre-qualifying can ensure you don’t waste time applying for a card you can’t get.
If you can’t pre-qualify, the best way to get approved for any business credit card is to choose the option you qualify for. Start by checking your personal credit score, so you’ll know if it’s high enough to qualify for most cards or if you’ll need to look for business credit cards for bad credit.
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How long does it take to get approved for a business credit card?
There is no hard and fast rule about how quickly a business credit card application can be processed. Credit card companies need to take the time to review your business finances as well as your personal credit history.
For example, you can get approved for a Capital One Business Credit Card almost instantly — in 60 seconds. However, if additional information is required, you may have to wait more than two weeks for a decision.
If you need quick access to working capital, you can receive your credit card number before the card arrives in your mailbox. Most American Express business credit cards offer this feature, for example. This makes it easy to use your business credit card right away.
What is the difference between a business credit card and a personal credit card?
Business credit cards and personal credit cards work in very similar ways. Both may offer bonus points, reward points, sign-up bonuses, etc. but there are slight differences in how they are handled. Business cards and personal cards may have different terms and conditions. Also, business credit cards are designed to benefit business needs and allow free access to certain business tools.
What credit scores are required for business credit cards?
Most business credit cards require good to excellent credit for approval. Generally, a score of 700 and above is considered good. A score of 800 or above is considered excellent. There are a few business credit cards available to small business owners with reasonable credit. A reasonable credit score ranges from 640 – 699.
Is it hard to get a business credit card?
You usually can’t get an unsecured business credit card without personal credit. Most issuers will require good or excellent credit. But if you’re starting out with no credit, you’ll need to start with a personal card, build your score, and then apply for a business credit card.
How long does it take to get a business credit card?
It takes about 7-10 business days to get a new credit card after approval. That means it usually takes 14-24 business days to get a credit card after submitting an application, although the timeframe will be shorter if you’re approved right away.
Can one get a business credit card?
You don’t need to run a corporation, but you do need to be able to list some type of business, even if it involves one person.
Do business credit cards check personal credit?
When you apply for a business credit card, the card issuer may consider both your business track record and your personal credit. This can include running a hard credit check on your personal credit, which can lower your credit scores by a few points.
Business Credit Card Alternatives for Bad Credit
Secured credit cards come with a cash deposit, making providers more willing to work with business owners with poor personal credit or no credit history. The card issuer can take that deposit if you fail to make your payments.
But if you need more money than a secured card’s credit limit, a bad-credit business loan may be an option. For example, Fundbox offers a business line of credit of up to $150,000 to business owners with a credit score of at least 600 and six months in business.
If you are a startup with bad credit, an option like invoice financing may make sense depending on your business model. BlueVine’s invoice financing product, for example, offers up to $5 million in funding and is available to businesses with a minimum credit score of 530 and at least three months in business.
You can also consider a personal loan for bad credit or a personal credit card for bad credit. While NerdWallet recommends separating your personal and business finances, these products can provide an opportunity to strengthen your credit for short-term financing and future business borrowing needs.
Are there instant-approval business credit cards for bad credit?
If you have bad credit, it will be tough to get approved for most business credit cards. Your best bet will likely be a secured business credit card.
With a secured business credit card, you provide a refundable deposit at the opening of the account. This helps reduce the lending risk for the credit card company and helps you start to build business credit.
However, credit limits on secured cards are tied to your deposit. That means these cards may not necessarily be the best fit if you’re looking for an instant-approval business credit card because you need to access additional capital quickly.
In that instance, a bad credit business loan may make more sense. You may be able to qualify for a business line of credit, which functions similarly to a credit card, with subpar personal credit. Or if you have outstanding invoices from clients, invoice factoring could turn them into quick cash.
Does a business credit card check personal credit?
Applying for your first business credit card will trigger a hard credit inquiry on your personal credit, which could lower your score by a few points. And lenders might continue to conduct personal credit inquiries when you apply for additional small-business credit cards or small business loans.
Get a business credit card
Although you can use a personal credit card for your business, it’s better to get one specifically for your company. They offer benefits designed to help business owners do everything from accounting to expense management. Just be aware that business cards remain your personal responsibility. Even if it’s in your business name, you’ll be on the hook for all payments and any outstanding debt.
Even if your credit is bad, there are still some good business cards for people with bad credit to consider. But if you’re able to build your score to at least the good credit range, you can start looking into the best business credit card options. As you’ll see, there are many, so give this task plenty of time.
Be aware that some business cards are charge cards while others are credit cards. With a charge card, there is no preset credit limit and you’ll need to pay the entire balance within about 30 days. With a credit card, there is a maximum amount you can charge, but you can pay at least the minimum requested payment and then revolve the rest. Ultimately, you may want one of each.
Additionally, almost all business cards have rewards programs attached to them, so read over the program’s details and focus on those you’ll use. Rewards programs differ, too, so make sure it’s a good match for your business. One card may offer an exceptional rewards value for restaurant meals, while another offers boosted rewards on office products. Or, if you think traveling will be in your future, concentrate on a business card that gives you travel perks related to flights, airport amenities, hotels and car rentals.
It’s also worth noting that many business credit cards offer excellent sign-up bonuses, too, which will allow you to earn a large amount of points, cash or miles after spending a certain amount within a specific timeframe after card activation.
Some business cards also offer 0 percent APRs for a fixed number of months, which will give you a nice amount of time to pay for your venture’s needs before financing fees are assessed. As long as you pay the debt in full before the real APR begins, you’ll essentially get a free loan.
Finally, prepare for annual fees. Not all cards charge them, but if you can get enough perks and rewards out of an account, you’ll come out ahead.
Why You Should Get a Business Credit Card
Getting a business credit card doesn’t sound like much, they really have made my life so much better. And they can do the same for you! Not only can you get a valuable welcome bonus with the top business card offers, but having a business card will allow you to:
Separate your business expenses from personal expenses, making it easier to find write-offs and deductions when it comes time to file taxes.
Help fund travel-related items like airfare, hotel or car rental (which is especially handy for new startups that may be strapped for cash)
Buy coverage and other benefits, such as cell phone and car rental insurance
Rewards for your everyday purchases
What you will be asked when you apply for a business credit card
Applying for a business card is similar to applying for a personal credit card — the main difference is that along with your personal information, you must provide information about your business.
For example, you must provide your name, address, and social security number along with business information such as your business name, business contact information, number of employees, your annual revenue, etc.
You will also be asked to provide an employee identification number. If you don’t have one, you can use your Social Security Number (SSN) instead.
The application will vary depending on which bank or issuer you are applying with. But here’s our step-by-step guide to applying for a Chase Business Card, for example.
How to Apply and Get Approved for a Business Credit Card
What qualifies as a business?
If you do anything outside of your regular day job for profit, you may qualify for a business credit card. Doing any kind of yard work or maintenance, selling things on eBay, and tutoring are all activities that qualify you as a small business owner. In other words, you don’t have to be an executive at a large multi-million dollar corporation to qualify for a business card.
If you are a small business owner, you can take a look at some of the best business credit cards based on your specific goals. While many business owners file a separate business license or formally incorporate their company, a business credit card is not necessarily required.
That said, there are reports online of people being asked for proof of business existence when they applied for a business credit card. In fact, that’s exactly what MMS editor Meghan was asked to do when she recently applied for an amazing offer on the Ink Business Cash® Credit Card. She was able to satisfy the bank’s request by providing proof of the business EIN. You can get an EIN for free through the IRS website.
Frequently Asked Questions About Business Credit Cards
What are business credit cards?
Business credit cards are cards issued by banks that are used by businesses rather than individuals. Having a business credit card can help your business build business credit which, in turn, can help businesses borrow more and grow in the future. There are business cards for businesses of all types and sizes. The right one for you depends on your business’s spending habits and your own financial needs and goals.
Can you get a business card without business income?
We get a lot of questions about whether or not it is possible to get approved for a business card with very little business income. Unfortunately, the answer is not straightforward. Every bank has a different set of criteria and business income is just one of several factors they look at.
Many business credit cards are personally guaranteed, meaning the bank will look at both your personal and business income combined. They’ll also look at your personal credit history, so if you have a good credit score and other income besides your small business, you’ll have a better chance of getting approved.
Banks may also consider your relationship with them. In my case, I’m sure it didn’t hurt to already have a 10+ year relationship with Chase, and excellent payment history on multiple personal credit cards with them.
Ultimately, the bank has the final say on whether you will be approved, and each lender has different approval criteria. So even if you qualify at one bank, it doesn’t mean you’ll qualify for a business card at another bank.
What is a business credit score and can you check yours?
Your business credit report and score is based on a separate credit file than your personal credit report and various sources of information.
While your personal credit information is linked to your Social Security number (and other identifying information), your business report and score are linked to your Employer Identification Number (EIN) or Tax ID number.
If you’ve applied for a business card in the past or have owned a business for several years, it’s worth keeping track of your business personal credit. That’s because it will affect things like the loan you want to get or if you want to extend your business credit. Here’s our guide on how to check your business credit report.
How do I build business credit?
Building business credit is similar to building personal credit. Start slow, be responsible, and you’ll build a solid credit history based on things like your banking history, business income, and more.
Bottom line
You must have a qualifying business to apply for a business credit card. But what is surprising to many is what actually qualifies as a business. You don’t have to be an executive at a large corporation to qualify as a business owner. As long as you do anything outside of your regular day job for profit, you’ll be eligible for a business credit card.
Additionally, many banks will look at both your personal and business income when deciding whether to approve you for a business credit card. So even if you have a new business with low income, it is still possible to get approved for top business cards if you have other sources of income and a good credit score.
Have you had success applying for a business credit card as a new business owner? Feel free to share with us in the comments below!