Are you a business owner with bad personal credit, struggling to get your hands on a business credit card? Good news: you've stumbled upon the perfect resource! Despite your credit challenges, a business credit card can still be within your reach, designed to adapt to your specific needs –and it's easier to acquire than you might think. So, let's dive in, and explore your options for securing a business credit card despite poor personal credit.
Business Credit Cards For Bad Personal Credit Table of Contents
Understand Your Credit Situation
Before you start your quest for a business credit card, it's essential to understand your credit situation. Get a copy of your credit report, check for errors, and repair them if necessary. Typically, a personal credit score below 580 is considered poor or bad. Knowing this will help you understand what cards and options might be available for you.
Secured Business Credit Cards
A secured business credit card is designed specifically for business owners with less-than-stellar credit. By making a deposit, you provide the card issuer with collateral that helps mitigate the risk they're taking on by extending you credit. This deposit works as your credit limit, and you can access funds up to that amount. As you make on-time payments, your credit score will improve, allowing you to move on to an unsecured card in the future.
Here are some popular secured business credit cards:
- Wells Fargo Business Secured Credit Card
- BBVA Compass Business Secured Credit Card
- First National Bank Business Edition® Secured Visa® Card
Alternative Business Credit Options
If you cannot obtain a secured business credit card, there are alternative business credit options available:
Microloans
Microloans are small business loans typically ranging from $500 to $50,000. They are issued by non-profit organizations and alternative lenders to support small businesses unable to secure traditional financing. These lenders might be more lenient with credit requirements, making it easier to obtain funding.
Trade Credit
Trade credit is an arrangement where suppliers or vendors provide goods or services upfront and bill you later. This can help you obtain necessary products and services for your business without needing an immediate payment. While trade credit may not be a credit card, it can still help improve your credit score as you establish a history of timely payments to vendors.
Venture Capital
Venture capital is investment funding provided by individual investors or venture capital firms. While this method typically involves giving up some ownership stake in your business, it can be beneficial if you are unable to secure a business credit card or loan due to poor personal credit.
Business Credit Cards For Bad Personal Credit Example:
Imagine you own a small boutique with poor personal credit. Your business relies on inventory, and you need to purchase products upfront. However, traditional business credit cards are out of reach due to your credit score. In this scenario, consider applying for a Wells Fargo Business Secured Credit Card. You deposit $5,000, and this becomes your credit limit. As you make timely payments, your credit score improves, and eventually, you can upgrade to an unsecured card.
Alternatively, you could approach a supplier or vendor and negotiate a trade credit agreement. You could procure inventory for your boutique without having to pay upfront, and as you make prompt payments, your credit score will improve.
In conclusion, poor personal credit needn't be a barrier to obtaining a business credit card or financing. Secured business credit cards, microloans, trade credit, and venture capital are all viable options that can help support your business activities while allowing you to rehabilitate your credit score. When you choose the best financing option that suits your needs, your business will thrive despite your credit challenges!
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