If you have bad credit, don’t despair. You can repair bad credit, and one of the best ways to do that is by using business credit cards.
Crazy, right? By owing money on a credit card, you can build business credit. But it can work that way for you. You just have to choose the right business credit cards for bad credit, and make payments on time.
What Is Bad or Poor Personal Credit?
Bad or poor personal credit is easily defined by numbers. If your credit rating is 579 or lower, you have poor or bad credit according to your personal credit score.
How does that happen? It can happen if you miss payments or make late payments on a loan or utility bill. It can also happen if you’ve had a credit limit on a personal credit card and gone over that amount with expenditures.
How Do You Qualify for a Business Credit Card with Bad Personal Credit Scores?
Anyone who receives mail knows that credit cards are competing for your business. And the business credit card issuers will compete for your business credit card even if you have bad credit.
The credit card issuers will attach conditions to your use of the card, typically in two ways:
- Secured credit card – Secured credit cards require that you make a security deposit, which can be a cash deposit. Your credit limit will be 110% of the deposit, in most cases. The business-secured credit card will be linked to your bank account. The deposit and bank account link are your personal guarantee that you can pay off the card.
- Full payment of balance – Full payoff is required in each monthly billing period. You may be required to link the card to a business account or savings account. These are unsecured credit cards that don’t require a deposit. If you don’t comply with monthly payoffs, you’ll lose the card and your credit history will lose more points.
Choosing the Right Business Credit Cards for Bad Credit: Our Methodology
Selecting a business credit card when you have bad credit requires careful consideration of various factors. Each factor is rated on a scale of 1 to 5, where 1 is less critical and 5 is most critical. Here are the factors we took into account when compiling this list.
- Approval Odds: Consider credit cards that are designed for businesses with bad credit or those that offer pre-approval checks without impacting your credit score.
- Annual Percentage Rate (APR): The APR is critical, as higher rates can increase the cost of borrowing, especially important for businesses with financial constraints.
- Fees: Evaluate all associated fees, including annual fees, late payment fees, and foreign transaction fees, as they can add up quickly.
- Credit Building Potential: Choose cards that report to credit bureaus, helping you build or improve your business credit score over time.
- Credit Limit: A card with a reasonable credit limit can be helpful, but it’s also important not to overextend your business financially.
- Rewards and Incentives: While not as critical, rewards like cash back or points can be beneficial, especially if they align with your business spending.
- Additional Features and Benefits: Look for additional benefits such as expense management tools, free employee cards, or travel insurance.
- Customer Service and Support: Good customer support can be crucial, especially for businesses navigating credit issues.
- Flexibility in Payments: Cards offering flexibility, such as adjustable payment dates, can be beneficial for managing cash flow.
- Secured vs. Unsecured: Decide whether a secured credit card (requiring a deposit) is more suitable for your situation than an unsecured one.
Best Business Credit Cards for Bad Credit
We’ve rounded up our best picks for business owners with poor credit scores. Using the card and making payments means you’ll be building credit.
|Credit Card Name||APR||Annual Fee||Credit Limit||Rewards||Special Features|
|First National Bank Business Edition Secured VISA||0% for the first year, then 23.99%||$39||110% of deposit amount||1.5% cash back||Secured card|
|Stripe||N/A||N/A||Depends on Stripe account||1.5% cash back||No credit check, branded logo, partner business discounts|
|Chime||N/A||N/A||Adjusts with deposits and payments||N/A||No credit check, automatic direct deposit required|
|Discover IT||10.99% for balance transfers for 6 months, then 27%||None||110% of deposit amount||5% cash back on gas purchases||Secured card, low APR on balance transfers for 6 months|
|My Premier Bankcard Mastercard||19-36%||N/A||Established at the time of application||N/A||Unsecured card, credit limit increases with timely payments|
|Progress Credit VISA/Mastercard||N/A||N/A||Established at the time of application for VISA, determined by deposit for Mastercard||N/A||Unsecured VISA and secured Mastercard, reports to credit bureaus|
1. First National Bank Business Edition Secured VISA
This VISA card from First National Bank includes standard features you get with a business-secured credit card, such as a credit limit of 110% of your deposit amount. You’ll get a 0% APR for one year, before it jumps to 23.99%. The annual fee is $39 and you’ll get 1.5% cash rewards back.
You may already be familiar with Stripe, which is often used by small business owners to process payments. You must have a Stripe account to get this card for bad credit and there’s no credit check. The good news is that you can get the card immediately, which makes it a great choice for startup business credit cards. You’ll get a card that carries your branded logo, 1.5% cash rewards back and partner business discounts.
Chime is a secured VISA card that you can get with no credit check. To get a Chime card you must set up an automatic direct deposit payment to your Chime account. The account will constantly adjust as you make deposits and payments, and when you log in you’ll be able to see a running tally of what amount you have available to spend.
4. Discover IT
If you have an outstanding balance on another credit card, the Discover IT card will give you a 10.99% APR on the transferred amount for six months (after six months, 27%). There is no annual fee. It’s a secured credit card and your credit amount will be 110% of your security deposit amount. You can get 5% cash rewards back on gasoline purchases.
5. My Premier Bankcard Mastercard
The Premier Credit Cardis one of the unsecured business credit cards. Your credit limit is established at the time of application, but will steadily increase as long as you make timely payments and don’t exceed your set limit. The APR range is 19-36%.
6. Progress Credit VISA/Mastercard
That’s right, the Progress Credit card is a little of both. The VISA is an unsecured business credit card with a credit limit established at application, and the Mastercard is a secured credit card with the credit limit set by your security deposit.
Why do this? Both VISA and Mastercard will report to the business credit bureaus, making this one of the top business credit cards for bad credit, with fast credit scores repair.
Should Business Owners Get Secured Credit Cards With Bad Credit?
Every business owner needs a business card, especially for business purchases. A secured card may seem restrictive, but a secured card will make you stick to your own credit limit.
Proper use of the secured credit card will help you boost your credit score. Most of the secured business credit cards offer cashback which you can apply as a statement credit.
Begin with your security deposit, get the secured business credit card with a secured credit limit, make regular payments, build credit and improve your credit score and the payments are reported to three major credit bureaus.
Can You Use an EIN to Apply for a Credit Card?
Yes and this can be done with most business credit cards. Applying this way can help you keep your personal and business expenses separate, as you work on rebuilding credit.
What Credit Score Is Needed for a Business Card?
You can get small business credit cards with poor or bad credit, with scores of 579. With that score, you can get a secured or unsecured card, and start improving your credit health as reported by the consumer credit bureaus.
What Is the Best Business Credit Card with Bad Credit?
Choosing the best credit card for businesses with bad credit can indeed be a challenging process, as it requires a careful evaluation of your business’s specific needs and financial situation.
Here’s a breakdown of things to consider:
- Unsecured vs Secured Cards: Unsecured cards do not require a security deposit and can be a good option if you don’t have much money for a deposit. On the other hand, secured cards may have lower interest rates and fees, and could be more accessible with bad credit. Your decision here would depend on your available cash flow and your confidence in your ability to make repayments.
- No Credit Check Requirement: Some cards like the Stripe and Chime cards mentioned above do not require a credit check. These options might be suitable if you’re looking to obtain a credit card quickly and without impacting your credit score with a hard inquiry.
- Fees and Interest Rates: Always pay attention to the fees and interest rates of the card. While a lower annual fee might seem appealing, a higher APR could result in more costs over time if you carry a balance.
- Rewards and Benefits: Evaluate the rewards and benefits that each card offers. For example, the Discover IT card offers 5% cash back on gas purchases, which could be beneficial if your business involves a lot of transportation or deliveries.
- Credit Building: A critical aspect of choosing a card when you have bad credit is finding one that will help you build your credit score. Ensure the card issuer reports to the major credit bureaus. Timely payments and responsible usage will help improve your score over time.
Remember, getting a business credit card and using it responsibly can help build your credit score. The better your credit score, the more likely you’ll qualify for a business loan, or a credit card with better terms and benefits in the future. A good credit history can also lead to better terms from suppliers and lenders, and could open up more opportunities for your business. Always make sure to compare all the features, benefits, and drawbacks before deciding on a credit card.
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