How to Get Approved for a Business Credit Card with a Low Credit Score
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How to Get Approved for a Business Credit Card with a Low Credit Score
May 16, 2018
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How to Get Approved for a Business Credit Card with a Low Credit Score

It should come as no surprise that small business credit cards account for $430 billion in spending in the United States. After all, for small business owners, these credit cards are crucial, as they fix cash flow issues and allow them to separate personal and business expenses.

However, if you have a low credit score, you may find yourself on the outside looking in on the convenience that a business credit card provides.

Fortunately, there are options available to business owners with low credit scores. With a little extra effort and financial discipline, you can get approved for a business credit card. Keep reading to find out how to secure a business credit card, even with a poor credit score.

Consider Secured Credit Cards

If your score is less than stellar, you should consider a secured credit card. These credit cards are typically available to you even if you have a bad credit score, although it will require a small down payment and could carry an annual fee. In addition, the interest rate might be relatively high compared to other options.

Even with the downsides mentioned above, a secured credit card can give you the opportunity to rebuild your credit history. As long as you make your payments on time and avoid paying interest, the annual fee would be well worth the long-term benefits of an improved credit score.

Understand How to Improve Your Personal Credit Score

 As a business owner, you should make it a top priority to improve your credit, especially your personal credit score. You might not realize it, but even business credit card companies will review your personal score to determine if you’re qualified or not.

According to Equifax, your personal credit score is made up of the categories shown below. The percentages represent the approximate weight that credit bureaus assign to each category:

  • Payment History (35 percent)
  • Credit Utilization Ratio (30 percent)
  • Type of Credit Used (15 percent)
  • New Credit (10 to 12 percent)
  • Length of Credit History (5 to 7 percent)

As you can see, the best way to improve your credit score is to make your payments on time and in full. However, if you can’t do that, you can still be mindful of these other categories to either improve your score or make sure it doesn’t fall any further.

Research Credit Cards with Lenient Credit Score Requirements

 It’s true, to get approved for the best business credit cards, there’s no getting around the high credit score requirement. However, if you’re willing to give up perks and rewards, you can find credit cards with lower credit score requirements. For example, the Capital One Spark Classic for Business is available to applicants with an average credit score.

You can browse more credit cards available to business owners with bad credit at creditcards.com.

Legitimize Your Business

When you apply for a business credit card, you’re asking the credit card company to take a chance on you. They want to know that your business is viable, and that you’re in it for the long haul.

By incorporating or forming an LLC, applying for an EIN through the IRS, registering your business with the federal government, and opening accounts with your legal business name, you signal to creditors that you’re a risk worth taking. Of course, this won’t solve all your problems, but it could help you tip the balance, and it’s all free to do.

Conclusion

 There’s no denying that, with bad credit, obtaining approval for a business credit card is going to be a challenge. However, while it might not feel like it now, you’ll likely have several options at your disposal. As you explore your options, recommit yourself to paying off debts and establishing consistent, timely monthly payments.

It might be challenging in the short run, but the commitment you make now will turn into an extremely valuable asset later in the form of an improved credit score.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].
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