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.
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.
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. There’s a high approval rate for those with poor credit, and the card is widely accepted.
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.
Small Business Deals
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. So there’s potential to increase your spending limit over time.
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 Card is 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.
|Credit Card Name
|First National Bank Business Edition Secured VISA
|0% for the first year, then 23.99%
|110% of deposit amount
|1.5% cash back
|Depends on Stripe account
|1.5% cash back
|No credit check, branded logo, partner business discounts
|Adjusts with deposits and payments
|No credit check, automatic direct deposit required
|10.99% for balance transfers for 6 months, then 27%
|110% of deposit amount
|5% cash back on gas purchases
|Secured card, low APR on balance transfers for 6 months
|My Premier Bankcard Mastercard
|Established at the time of application
|Unsecured card, credit limit increases with timely payments
|Progress Credit VISA/Mastercard
|Established at the time of application for VISA, determined by deposit for Mastercard
|Unsecured VISA and secured Mastercard, reports to credit bureaus
The table provided is a summary of the key features based on available information from each provider, and may not include all fees, penalties, or benefits associated with each card. Always check the full terms and conditions before applying for a credit card.
Choosing the Right Business Credit Cards for Bad Credit: Our Methodology
When guiding our readers in selecting business credit cards suitable for bad credit, we consider several key factors. These criteria are crucial in determining the practicality, benefits, and overall impact of the credit card on the user’s financial health. Each criterion is rated on a scale from 1 to 5, where 1 indicates the least importance and 5 the highest importance in our evaluation:
- Approval Odds for Bad Credit
- Importance: 5
- We prioritize cards that have higher approval odds for individuals with bad credit. This includes cards designed for rebuilding credit or those with more lenient credit requirements.
- Fees and Interest Rates
- Importance: 5
- The cost of using the credit card, including annual fees, interest rates, and any hidden charges, is a critical factor. Lower fees and competitive rates are preferred to minimize financial strain.
- Credit Building Capabilities
- Importance: 5
- Cards that report to major credit bureaus and help in building or improving credit scores are highly valued.
- Spending Limits and Increases
- Importance: 4
- We assess the initial credit limits offered and the potential for credit limit increases over time, as this can impact business purchasing power and credit utilization.
- Additional Benefits and Rewards
- Importance: 3
- While not the primary concern for bad credit cards, any additional benefits, such as cashback, rewards programs, or travel perks, are considered as they can add value to the card.
- Customer Support and Financial Education Resources
- Importance: 3
- Access to customer support and educational resources can be crucial for individuals managing bad credit. We look for cards that offer tools for financial management and education.
- Flexibility in Payments and Terms
- Importance: 4
- The flexibility in payment options and understanding terms, especially for businesses with fluctuating cash flow, is important.
- Security Features
- Importance: 4
- Security features such as fraud protection and alerts are essential, especially for businesses that may have multiple users of the card.
By using these criteria, we aim to identify business credit cards that are not only accessible for those with bad credit but also offer the best opportunities for financial management and credit improvement.
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.
Strategies for Managing Bad Credit as a Business Owner
Understanding Your Credit Report
Regularly Review Credit Reports: It’s vital for business owners with bad credit to regularly review their credit reports from major credit bureaus. This allows you to track your credit score’s progress and identify any errors or discrepancies that might be impacting your score negatively.
Dispute Errors on Reports: If you find inaccuracies in your credit report, you can dispute them with the credit bureaus. Rectifying these errors can help improve your credit score, making it easier to qualify for better credit options in the future.
Building and Maintaining Good Credit
Diversify Credit Types: While using business credit cards is an excellent way to build credit, diversifying your credit types can further enhance your credit profile. This could include taking out a small business loan or a line of credit, provided these are managed responsibly.
Keep Credit Utilization Low: Aim to keep your credit card utilization below 30% of your credit limit. High utilization can be seen as a sign of financial distress and may negatively impact your credit score.
Avoid Opening Several New Accounts Quickly: While it might be tempting to open multiple accounts to increase available credit, this can backfire. Opening several new accounts in a short period can lower your average account age, which might negatively impact your credit score.
The Role of Personal Credit in Business Financing
Access to Financing: Personal credit can play a significant role in your ability to secure business financing. Lenders often look at personal credit scores as part of their lending decisions, especially for small businesses and startups.
Interest Rates and Loan Terms: A higher personal credit score can lead to more favorable loan terms and lower interest rates. This can reduce the overall cost of borrowing for your business.
Improving Personal Credit for Business Growth
Separate Personal and Business Finances: Keeping your personal and business finances separate is crucial. This not only helps in better financial management but also prevents your personal credit issues from directly impacting your business.
Consult Financial Advisors: Consider consulting with financial advisors or credit counselors. They can provide personalized advice on managing and improving your credit, tailored to your specific business needs.
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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