If you have bad credit, don’t despair. You can repair bad credit, and one of the best ways to do it 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 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 score is 579 or below, you have poor or bad credit according to your personal credit score.
How does that happen? It can happen if you fall behind on payments or fall behind on a loan or utility bill. It can also happen if you have had a credit limit on a personal credit card and have spent more than that amount.
How do you qualify for a business credit card with bad personal credit scores?
Anyone who receives mail knows that credit cards compete for your business. And business credit card issuers will compete for your business credit card even if you have bad credit.
Credit card issuers will place conditions on your use of the card, generally in two ways:
- Secured Credit Card: Secured credit cards require you to make a security deposit, which can be a cash deposit. Your credit limit will be 110% of the deposit, in most cases. The credit card guaranteed by the company will be linked to your bank account. The deposit and bank account link are your personal guarantee that you can pay off the card.
- Balance Payment in Full: Payment in full is required each monthly billing period. You may need to link the card to a business account or savings account. These are unsecured credit cards that do not require a deposit. If you don’t meet the monthly installments, you will lose the card and your credit history will lose more points.
How to choose the best business credit card for bad credit?
Choosing the best business credit cards is similar to whether you have excellent or bad credit. You need to weigh several factors and choose the small business credit card that is best for you. Using a business card helps you establish business credit and improves your business credit score.
- Refund of money – This can help you build your credit limit if you simply put the “cash back” into the credit card deposit amount. You may be able to recover unlimited cash rewards.
- rewards – Earning reward points can help you “save” for certain purchases, especially if the credit card issuer has partner businesses.
- specific use – You may intend to use the card solely to buy gas, especially for small business owners who need to make pickups and deliveries.
- APR – Many bad credit cards start with 0% APR but after six months jump to over 30%. Read the fine print and mark your calendar.
- Credit limit – Some bad credit cards have a credit line limit based on the amount of your deposit. Others allow you, through the application process, to apply for various amounts of lines of credit.
- Annual quota – Some bad credit cards have no annual fee. Some charge less than $50 but make up for it with a lower APR or better rewards or cash back.
The best business credit cards for bad credit
We’ve rounded up our top picks for business owners with low credit scores. Using the card and making payments means you’ll be building credit.
1. First National Bank Business Edition Guaranteed VISA
This First National Bank VISA Card 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 0% APR for one year, before it jumps to 23.99%. The annual fee is $39 and you will earn 1.5% cash back rewards.
2. Stripe
You may already be familiar with Stripe, which small business owners often use to process payments. You must have a Stripe account to get this card for bad credit and no credit check. The good news is that you can get the card right away, making it a great option for startup business credit cards. You’ll get a card with your brand logo, 1.5% cash back, and partner discounts.
3. Tinkerbell
Chime is a secured VISA card that you can get without a credit check. To get a Chime card, you must set up an automatic direct deposit payment into your Chime account. Your account will constantly adjust as you make deposits and payments, and when you log in you’ll see an up-to-date count of how much you have available to spend.
4. Discover YOU
If you have an outstanding balance on another credit card, the Discover IT card will give you an APR of 10.99% on the transferred amount for six months (after six months, 27%). There is no annual fee. It is a secured credit card and the amount of your credit will be 110% of the amount of your security deposit. You can earn 5% cash rewards on gas purchases.
5. My Premier Bankcard Mastercard
The Premier credit card is one of the unsecured business credit cards. Your credit limit is set at the time of application, but it will constantly increase as long as you make payments on time and do not exceed the set limit. The APR range is 19-36%.
6. Credit Progress VISA/Mastercard
That’s right, the Progress credit card is a bit of both. The VISA is an unsecured business credit card with a credit limit set on the 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 business credit bureaus, making it a leading business credit card for bad credit, with fast credit score repair.
Should Business Owners Get Bad Credit Secured Credit Cards?
Every business owner needs a business card, especially for business purchases. A secured card may seem restrictive, but a secured card will force you to stick to your own credit limit.
Proper use of the secured credit card will help you improve your credit score. Most business secured credit cards offer cash back that you can apply as a statement credit.
Start with your security deposit, get the secured business credit card with a guaranteed credit limit, make regular payments, build credit and improve your credit score and payments are reported to three major credit bureaus.
Can an EIN be used to apply for a credit card?
Yes, and this can be done with most commercial credit cards. Applying this way can help you keep your personal and business expenses separate, while you work to rebuild your 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 consumer credit bureaus.
What is the best bad credit business credit card?
Your choice as a business owner depends on your needs. If you don’t have a lot of money for a deposit, you may prefer an unsecured card. You may prefer a card with no personal credit check required.
The important thing is to get a business credit card. Using it correctly will help you build credit. The better your credit score, the more likely it is that you can get a business loan and later get a better credit card.
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