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5 Steps to Get a Business Credit Card, Bad Credit or Not

November 14, 2023
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If you have bad personal credit, you may find yourself struggling to get a business credit card. The key to getting a business credit card, bad credit or not, is business credit. 

You Can Get a Business Credit Card, Bad Credit Not Being an Issue

You’re likely aware business credit is a good thing.  You know you need it to help you fund your business.  But do you know how it helps you specifically get credit cards, even if you have bad personal credit? Furthermore, do you know how to get it? 

How Do You Get Business Credit?bad credit business credit card Credit Suite 

Business credit doesn’t just happen like personal credit does.  You have to work to build business credit intentionally. While not hard, it is a process, and a time consuming one at that. The sooner you start the better, especially if you need a business credit card, bad credit being an issue. 

Business Credit Card Bad Credit: Separation is Key

First thing’s first. You have to establish your business as an entity separate from yourself the owner. This means not using your own name or address. That doesn’t mean you have to get a separate phone line, or even a separate location.  

You do need separate contact information however.  You can get a business phone number pretty easily that will work over the internet instead of phone lines.  In addition, the phone number will forward to any phone you want it too so you can simply use your personal cell phone or landline if you want.  Whenever someone calls your business number it will ring straight to you. 

You can use a virtual office for a business address. This is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services.  In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person. 

Info on 7 Vendors Webinar Check out our best webinar with its trustworthy list of seven high quality vendors to help you build business credit.

Business Credit Card Bad Credit: EIN not SSN

The next thing you need to do is get an EIN for your business.  This is an identifying number for your business that works in a way similar to how your SSN works for you personally.  Some business owners used their SSN for their business. This is what a lot of sole proprietorships and partnerships do.  However, it really doesn’t look professional to lenders, and it can cause your personal and business credit to get all mixed up.   You can get one for free from the IRS.

This step is vital.  When you apply for a business credit card, bad credit can get in the way mainly because your SSN signals a look at your personal credit.  If you use your EIN instead of your SSN, the lender will only be seeing the credit attached to your business. 

Business Credit Card Bad Credit: Incorporation is Not Optional

Incorporating your business as an LLC, S-corp, or corporation is necessary for separation of business from the owner, and many other things. .  It lends credence to your business as one that is legitimate. It also offers some protection from liability. 

Which option you choose does not matter as much for these purposes as it does for your budget and needs for liability protection.  The best thing to do is talk to your attorney or a tax professional.  

Business Credit Card Bad Credit: Separate Bank Account

You have to open a separate, dedicated business bank account.  There are a few reasons for this.  First it helps solidify the separation between yourself and your business.  Also, it will help you keep track of business finances. This is important for tax purposes. 

There’s more to it however.  There are several types of funding you cannot get without a business bank account.  Many lenders and credit cards want to see one with a minimum average balance.  In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.

Info on 7 Vendors Webinar Check out our best webinar with its trustworthy list of seven high quality vendors to help you build business credit.

Business Credit Card Bad Credit: Starter Vendors

Now, once you have these things in place,  you need to get accounts that will report your payments to the business credit agencies. It sounds easy enough, but the catch is, you have to find vendors that will extend credit without you first having credit. 

We call these vendors starter vendors.  They will extend net terms on invoices with little requirement. They don’t check credit. Typically, they require a certain number of days in business, a minimum average balance in a business bank account, minimum annual revenue, or some combination of these things. 

Extending the credit isn’t enough however.  There are some that do this, but there are far fewer that will actually report those payments.  You need vendors to report payments to the business credit reporting agencies, thus building your business credit score. 

The Snowball Effect

Of course you are wondering what any of this has to do with applying for a business credit card, bad credit being in the way. Here’s how.  Once you have several of these starter vendor accounts reporting, your score will be strong enough to support store credit. 

A business store account is usually issued for that specific store or website specifically.  Their limits are usually on the lower side as well.  However, after you get a few of them and use them responsibly. Your score will grow even strong. These are cards from places like Home Depot, Staples, or Best Buy. 

Then, you should qualify for fleet credit. These are cards from places like Shell that are used specifically for gasoline and automotive repair and maintenance.  

After a few of those are reporting your consistent, on-time payments, you should have a strong business credit score and be able to apply for standard business credit cards that are not limited by where you use them or what you use them to buy. By using your EIN and not your SSN, you can get a business credit card, bad credit on your personal credit report and all. It’s all a big snowball effect. 

Info on 7 Vendors Webinar Check out our best webinar with its trustworthy list of seven high quality vendors to help you build business credit.

In the Interim

In the meantime, you can give your business credit building efforts a kickstart with a card like the Brex card for startups.  It  is one of the few true options if you are looking for a business credit card, back credit not being an issue.  Even a FICO as low as 300 may qualify.  There is no annual fee, and you can apply with your EIN rather than your SSN.  There is no personal guarantee requirement. 

The only catch is, not all industries qualify, and some industries require more paperwork than others.

You could also try getting accounts that you already have a relationship with to report to the business credit reporting agencies. This could be vendors you work with already. Maybe ask them if they will consider net terms and reporting payments. If you already make your payments consistently on time, they may be willing to do so without a credit check. 

You could also consider asking utilities that you already pay regularly to report your payments.  They may say no. They don’t have to do it. But they might, and if they do it can only help your business credit grow faster. 

A credit line hybrid can be another great option to help speed things along. You have to have a 700 or better personal credit score, but you can take on a credit partner if you don’t meet that. The account still reports to your business credit, so you can keep building your score. And, you can get up to $150,000 unsecured financing for your business. 

An Expert Can Help You Through the Steps 

It sounds easy enough to do all of this on your own.  However,  there are some steps that are easier than others. Specifically, it can be very difficult to find starter vendors that will report to your business credit. For this and other difficult steps, it can be very helpful to have a business credit expert help you out. It’s definitely worth considering. 

About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

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