Business Credit Cards for Bad Credit

Thursday, June 7, 2012 at 7:49pm by Site Administrator

Tips for Improving Your Bad Credit



Bad credit can be a hindrance when it comes to running your own business. Discover ways to improve your bad credit and how your business will benefit from an improved credit score.

How Can Bad Credit Affect a Business Owner?

Whether you’re a sole proprietor, small business owner or the mastermind behind a large corporation, bad credit can hurt your efforts and even slow the progress of your business. A poor personal credit score is liable to affect interest rates issued by a variety of lenders. Bad credit can lead to increased difficulty securing reasonable rates on loans, surety bonds, company insurance and business credit cards. There might be difficulty securing financial backing of all sorts.

What are the Benefits of Business Credit Cards?

One rather effective means of improving business credit is to purchase a business credit card. Unlike personal loans and lines of credit, business credit cards provide a unique set of benefits specific to owning a business. Additionally, all transactions made with a business credit card remain off the record where your personal credit history is concerned: business credit is built separately from personal credit, and neither poor nor healthy business credit card decisions will be reflected upon your personal credit score.

Business credit cards are advantageous for start-ups looking to conserve cash while purchasing supplies and inventory. They can offer a healthy boost to a business while decreasing out-of-pocket costs. Business credit cards often have sky-high credit limits, some reaching $50,000 and upwards. In addition to increased spending ability, business credit cards help ease the costs of business-related purchases by providing beneficial discounts on travel, shopping and supply outlets. They also help to separate business and personal expenses while providing hassle-free expense documentation for tax time; simply present a copy of your credit card statements to your accountant rather than scrounging around for receipts.


What Actions Increase the Likelihood of Business Credit Card Approval?

Business credit cards work to improve the health of your business and increase spending flexibility. Adhere to the following tips to improve your credit health and increase your odds of receiving business credit card approval.

  1. Know the Requirements
  2. Develop a solid understanding of what actually qualifies a business as a business. Many people are surprised to discover that they have some wiggle room in regards to this matter. Even if you’re selling hotcakes out of a van, you’re still participating in business-related activities and therefore qualify as a legitimate business. Those offering goods and services without the aid of employees are known as sole proprietors and need only the proper tax documentation to prove their legitimacy. Existing sole proprietorships, limited liability corporations, small businesses and major corporations will qualify for a business credit card more readily, although intent to procure a business is sometimes all it takes; this is known as a start-up venture.

  3. Open a Business Banking Account
  4. Aside from aiding in the distinction between personal and business finances, a long-established business banking account solidifies the idea that your business activities are credible.

  5. Limit Your Applications
  6. As with personal credit cards, business credit card approval can be trumped if you’re overly avid about getting your hands on one. Refrain from applying for too many business credit cards at once, and commit to limiting your application submission to two or three companies.

  7. Play by the Rules
  8. Treat your application for a business credit card as you would an application for a personal credit card or other line of credit. Although business credit cards don’t reflect upon your personal credit once you have them, creditors still examine your personal credit history closely when considering approval. Pay existing personal credit cards on time and don’t max them out. Refrain from making over-the-limit purchases: ideally, keep your balance paid down to 10% of your spending limit at all times.

  9. Erase Bad Credit
  10. Outstanding balances damage good credit scores, but they can be eradicated if you play your cards right. If you’re capable of paying an existing balance in full, contact the creditors and request a “pay for delete.” In exchange for payment, the company can delete the defaulted account from your credit report.

  11. Weigh Your Options
  12. Don’t throw in the towel too quickly and close out a bad account. Instead, work with creditors to arrange reduced payments on account of hardship, or contact a credit counseling agency. Seek ways to pay off old balances first, since closing bad accounts can prove detrimental to your credit score.

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