Menu
Business.com aims to help business owners make informed decisions to support and grow their companies. We research and recommend products and services suitable for various business types, investing thousands of hours each year in this process.
As a business, we need to generate revenue to sustain our content. We have financial relationships with some companies we cover, earning commissions when readers purchase from our partners or share information about their needs. These relationships do not dictate our advice and recommendations. Our editorial team independently evaluates and recommends products and services based on their research and expertise. Learn more about our process and partners here.
You may encounter challenges, but you still have options with less-than-stellar credit.
A business credit card can build your credit profile, improve your business’s cash flow and help you make essential purchases for your company. If your personal credit score has taken a hit, however, qualifying for a business credit card can be challenging — but not impossible. We’ll explain options small business owners with less-than-stellar credit can pursue to obtain a business credit card.
When assessing a business borrower’s creditworthiness, the card issuer considers income from all sources. The borrower’s personal credit score, however, dictates whether the applicant will be approved and how much interest they will pay.
Credit card issuers look for a good credit score when assessing a business borrower, just like they do when individuals apply for a personal credit card. The higher the score, the more creditworthy they consider the borrower. The lower the score, the riskier the business owner appears.
“Those with bad credit will have a difficult time getting a credit card, since there aren’t a lot of cards aimed at that particular segment,” said Gerri Detweiler, an author and expert on small business finance. “There are some issuers that will issue [credit cards] with a 600 score, which is not a bad credit score but not a great credit score.”
The table below offers a guide to what constitutes a good and bad credit score. Note that these are personal credit scores. Business credit scores use a separate scale, but most small business owners will rely on their personal credit scores when applying for a loan or credit card.
Excellent | 800 to 850 |
---|---|
Very Good | 740 to 799 |
Good | 670 to 739 |
Fair | 580 to 669 |
Bad | 300 to 579 |
The credit score requirement will vary among issuers, but many business credit card companies require a credit score of 675 or higher. That’s not to say there aren’t options for borrowers with poor credit scores, such as those hovering around 600.
When you have bad credit or no credit history to speak of, it can be challenging to get a business credit card — but not impossible. Here are some steps you can take to find a business credit card no matter your credit score.
If you’re applying for a business credit card with bad credit or no credit history, consider applying for a secured business credit card. A secured card is a viable way to improve your credit score and access credit.
Secured business credit cards have the following parameters:
“Payment history accounts for 35% of your credit score,” said Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling. “Business owners would be wise to make on-time payments.”
Aside from the deposit requirement, secured credit cards are similar to unsecured credit cards: There’s an annual percentage rate (APR), an annual fee, and potentially other charges.
In addition to secured credit cards, you could apply for a credit-builder loan. These loans are designed to help borrowers with no credit or bad credit improve their scores by making fixed payments on a monthly basis. As you make the payments, the lender will report to the credit rating agencies, helping you build or repair your credit score.
If you’re having a hard time getting approved for any credit cards, try improving your credit score a bit. Start by checking your credit reports with agencies like Experian, Equifax, and TransUnion. The reports will help you understand your current credit score and what is contributing to it. Then you can begin taking corrective action to boost your score.
Improving your credit score doesn’t happen overnight. It requires making owed payments on time. If you have overdue or delinquent accounts, it may take some time before these negative indicators fall off your credit report.
Focus on paying down existing debts as much as possible, too, since a big factor in credit scores is your debt-to-credit ratio. If you have high levels of debt compared to your available credit, you should aim to create some more breathing room by paying down debts aggressively (i.e., more than the minimum balance each month).
To give yourself an additional boost, you can add monthly bills for utilities, internet, and mobile phones to your credit report. Demonstrating that you make these non-credit payments on time can gradually increase your score, and, since you’re already making those payments to keep your business running, it represents no additional cost to you.
There are a lot of business credit cards out there, including those designed for people with no credit or bad credit. We recommend doing extensive research to find some options and then compare them. You may qualify for more business credit cards than you realize. If you qualify for even a modest credit limit, you can use that card as a way to further boost your score and eventually qualify for higher credit limits and more favorable terms.
Despite some business credit card issuers being more cautious about who they approve, there are cards for business owners with bad credit. Consider the following options.
Spark 1% Classic From Capital One is geared toward business owners with less-than-stellar credit. It considers applicants with credit scores as low as 580. You aren’t required to make a deposit with the card, but you will pay a hefty APR. At last check, the APR was 29.99% for purchases and cash advances.
There are no annual fees and you earn 1% cash back on every business purchase. You can redeem points at any time, regardless of how many you’ve accumulated.
Capital One reports your payment history to all three credit bureaus (Equifax, Experian, and TransUnion), which means your personal and business credit scores get a boost every month you pay on time.
The Bank of America Business Advantage Unlimited Cash Rewards Secured card helps establish and strengthen your business credit. It requires a security deposit of at least $1,000 and provides 1.5% cash back on your purchases, which you can use toward your credit card balance.
There is no annual fee and your account will be reviewed periodically to see if your credit limit can be increased. Potentially, you could transition to an unsecured card. The APR is currently 27.99%, with a 4% balance transfer fee. The card comes with cash-flow-management tools and travel and emergency services, and it can even help you monitor your business credit score for free.
The Ramp Card is unique because it doesn’t require a personal credit check or a founder guarantee. It provides 1.5% cash back on purchases and integrates easily into most popular accounting software programs and other must-have business tools, including Gusto and Workday.
If you want employees to have corporate cards, you can control and monitor their spending. It simplifies expenses and automatically collects receipts to make expense reports easier.
Robust software identifies duplicate transactions automatically and gives you information that can help you get a better price. The card has no annual fee, a 0% APR, and a $250 welcome credit upon approval. Freelancers and sole proprietors are not eligible for approval.
Annual fees, APR, consumer protection, and customer service tend to be the most crucial business credit card considerations.
Business credit card options are limited for owners with bad credit, but using an approved secured or unsecured card responsibly yields multiple benefits. Your credit score and maximum limit will increase, and you can qualify for other business credit cards and other business funding options.
Here are four best practices for improving your credit after getting approved for a new secured or unsecured business credit card:
To maximize your credit-building progress, avoid the following common mistakes:
If you don’t want a secured card but you still want to rebuild poor credit (or establish a good credit history if your business is new), consider applying for financing from a vendor.
“There are a number of business suppliers — most notably office and industrial supply companies — that are a little more lenient when it comes to using credit,” Coleman said. “Businesses that secure an account with one of these and make sure to pay invoices on time will improve their credit.”
The purchasing limit may be low to start with, but it will increase over time if you meet your obligations. “There are a number of companies that offer these types of accounts,” Coleman said.
Tejas Vemparala and Jennifer Dublino contributed to this article. Source interviews were conducted for a previous version of this article.