7 Ways You can Acquire A Business Credit even with Bad Credit

Securing a business credit card can be a game changer for any small business. It helps build your credit profile, improves cash flow, and allows you to make essential purchases. However, for those with bad personal credit, this can seem like an impossible task. The good news is that getting a business credit card with bad credit isn’t out of reach.

7 Ways to get a business credit card even with bad personal credit

1. Understand how lenders assess your credit

Understanding how issuers assess your creditworthiness is crucial when trying to get a business credit card with bad personal credit. Lenders usually examine both your personal and business financial profiles. While business income is considered, your personal credit history often has a greater impact on the approval process.

Lenders will typically check your credit score to evaluate the risk of offering you credit. While a score of 670 or higher is often preferred, there are still cards available for those with scores around 600. Being aware of what issuers prioritize can help ease the application process.

2. Explore secured business credit cards

If you’re wondering, “Can I get a business credit card with bad personal credit?” the answer is yes. One of the most viable options is a secured business credit card. Secured credit cards are designed for those with less-than-perfect credit scores. They work similarly to unsecured cards but require an upfront security deposit.

The credit limit on secured business credit cards is often tied to the amount of the deposit. For instance, a deposit of $1,000 could result in a $1,000 credit limit. Over time, as you demonstrate responsible use, your credit score may improve, and you could become eligible for an unsecured card.

Secured business cards, such as the Bank of America Business Advantage Unlimited Cash Rewards Secured, provide the advantage of earning cashback while also allowing you to improve your credit. It’s important to consistently make timely payments, as this is the most effective way to raise your credit score over time.

3. Improve your credit before applying

Securing a business credit card with bad credit isn’t out of reach, but boosting your credit score beforehand can significantly improve your chances. Begin by identifying the factors that have lowered your score, such as missed payments, high balances, or excessive inquiries.

Focusing on actions like reducing your debt, consistently paying bills on time, and disputing any inaccuracies on your credit report can have a positive impact. Over time, these responsible financial habits will raise your credit score, increasing your odds of qualifying for a business credit card with more favorable terms.

4. Consider business cards geared toward bad credit

Some credit card issuers offer options specifically for small business owners with bad personal credit. For instance, the Capital One Spark 1% Classic is one such card, which caters to individuals with lower credit scores, even as low as 580. While the interest rate may be high (around 29.74% APR), there’s no need for a security deposit, and you can still earn 1% cash back on your business purchases.

This type of card allows you to use it like any other business credit card, but with a higher APR and stricter terms. Over time, making on-time payments will help improve both your personal and business credit scores.

5. Look into vendor financing

Another alternative to secured credit cards is to establish vendor credit accounts. Many office and industrial supply companies offer vendor financing for small businesses, even if your credit is less than perfect. This type of financing works by allowing you to buy now and pay later, typically with 30- to 60-day payment terms.

Vendor accounts often have lower credit score requirements, making it easier for businesses to get approved. Not only will this improve your cash flow, but making on-time payments to vendors can help build your business credit, which can then make it easier to get a traditional business credit card in the future.

6. Apply with your current bank

If you’re still unsure how to get a business credit card with bad personal credit, one strategy is to apply through your existing bank. Banks that have a relationship with your business, such as providing your business checking account or a small business loan, may be more lenient when assessing your creditworthiness.

These banks have a history with your business and may be willing to extend you a business credit card even if your credit is less than stellar. Additionally, if you’ve built a good reputation with the bank through timely payments or strong cash flow management, it could increase your chances of approval.

7. Avoid common credit mistakes

Applying for a business credit card with poor personal credit may be your goal, but avoiding common credit mistakes is equally important. Mistakes like applying for too many credit cards at once, mixing personal and business finances, and maxing out your credit limit can hurt your chances of approval or harm your credit score further.

Monitoring your credit regularly through Dun & Bradstreet, Equifax, or Experian helps ensure there are no mistakes on your report and that you’re staying on track. Additionally, keeping your credit utilization below 30%—meaning you should only use up to 30% of your available credit—will positively impact your credit score.

Path to financial flexibility

Getting a business credit card with bad credit may require more effort, but it’s far from impossible. Secured credit cards, vendor financing, and building a strong relationship with your bank can all help you on your journey to improved credit and greater financial flexibility. Taking the necessary steps to understand your credit, make better financial decisions, and gradually improve your score will pay off in the long run.

The path to securing a business credit card can be tough, but every action you take brings you closer to accessing the financial resources that will support your business’s success. Focus on responsible credit management, avoid common pitfalls, and you’ll find your business on the right path to success.