Business Credit Cards For Bad Credit
Your personal credit may be poor. However, you realize that you’ll be at a disadvantage if you don’t learn how to find business credit cards for bad credit borrowers.
Successfully operating a business requires you to be resourceful. You must ensure that your business is able to smoothly operate on credit. This allows you to take advantage of opportunities and provides flexibility for managing your cash flow.
As a business person, you see opportunities and you understand that it’s necessary to find ways to obtain credit accounts. You need them despite your bad credit. And you know that they are available even if they’re not visible in your local market.
We discuss how to help borrowers with poor credit get credit cards on this website.
How Does a Business Credit Card Work?
Your business credit card application will be reviewed by an Underwriter at a bank. They want to know that your business is operating and you will continue to receive income over the following 1 – 2 years.
You understand business and risk so you realize that your interest rate and fees will be higher than they are for businesses and individuals with better credit profiles.
When your credit score diminished, it automatically resulted in a higher risk category for banks that offer business credit cards for bad credit. The financial institution can make this card available to you by adjusting its risk based pricing to offset the defaults that inevitably result over time with these types of credit products.
Secured and unsecured cards for borrowers with poor credit also have lower credit limits. That’s inconvenient, but it’s not forever. Your credit limits can be raised and they will over time with consistent payments on the bad credit credit card you are considering applying for now.
Secured Credit Cards For Business
Something else to be aware of is the possibility that you will be asked to provide a security deposit equal to the card’s credit limit. These are called “secured business credit cards.” This shouldn’t be confused with prepaid credit cards.
The security deposit is usually held in a savings account at the bank that gives you the credit card. Your money will be returned when either your credit improves or you close the card account.
The secured cards for business we recommend are from federally insured financial institutions (FDIC) so your risk of losing your card’s deposit is negligible. Your payments for the credit card are reported to the credit bureaus every month.
This means you are rebuilding your good credit history. People with bad credit can begin rebuilding their credit immediately with secured cards. This is great if your plans involve loans and credit lines to facilitate business expansion.
Although the deposit sounds uninviting, consider the effect it has on your interest rate and fees: It lowers them because the bank has secured for itself a way to cover its loss in case the card defaults. What most people applying for business credit cards don’t realize is that secured cards usually have lower rates and fees than unsecured business credit cards for borrowers with bad credit.
Business Credit Cards For Bad Credit? Sounds Too Good To Be True… Is There a Catch?
You have a direct method for improving your bad credit record with these accounts. This can be accomplished with credit cards for business persons who are willing to pay marginally more fees and a higher interest rate, or who can place a security deposit with the bank. And secured credit cards look and act just like any other regular credit card.
A person accepting your card for payment wouldn’t see that you placed a deposit to get the card. It doesn’t have “Secured Business Credit Card” or anything like that printed on it. The card has only the name of the bank issuing it along with the Visa or MasterCard logo. Your signature is on the card’s back.
If there is a downside to obtaining a business credit card intended for borrowers rehabilitating past bad credit, it’s probably this: The credit account is not as thrifty as the cards that are marketed to consumers with high credit scores and unblemished credit history. Interest rates and fees are marginally higher.
It’s important to keep in mind a couple of benefits these accounts offer:
- If you make payments on time, the bank providing you with the card will usually increase the credit limit.
- After your credit score improves, you can qualify for business loans and unsecured credit cards that carry low interest rates.
Recently, Fox Small Business Center (a web property that publishes on business-related topics) featured an article on the Web that discussed the importance of financing and credit for business success. Among the main points of this “How to Get a Business Loan With Bad Credit” article are the following:
“Most banks are not willing to provide capital to small business owners who have below average credit scores. However, there are lenders who are willing to take chances on a small business owner who may have run into financial problems…”
This is encouraging for every business owner who has been ravaged by credit problems. The article continues,
“Business Credit Cards can provide business owners with poor credit histories access to debt financing. Opening a credit rebuilding credit card is one of the best ways for a business owner to repair previous credit damage.”
What this makes clear is the importance of maintaining an above average credit score, of course. Showing recent consistency of payments on credit accounts, such as with a business credit card account for bad credit, demonstrates behavior that can justify approval for other business financing.
If you are ready to get started rebuilding your business credit with a credit card that has some of the lowest fees and interest rates, then visit this site to see several secured credit cards for rebuilding bad credit.