Using a credit card during business practices helps to keep your personal and professional finances separated and organized.
Not only does using a business credit card offer financial organizational benefits, it looks more professional when conducting business with customers and other businesses.
Just as with any other credit inquiry, applying for a business credit card may affect your personal credit.
If you're a business that has been established for less than two years, or if you don't have a clear showing of profits for at least 12 months, creditors will use your personal finances to make their final decision.
A low personal credit score will impact the amount of credit your're granted. Not only will you be granted less funding, you'll also have to deal with higher fees, including greater interest rates.
If you already know your credit standing is less than perfect, there are alternative options for obtaining credit cards for your business:
Unsecured with Limitation
A Business Account Via Your Current Bank
A prepaid card doesn't require a credit check, and there's usually limited requirements needed to obtain a card. A prepaid card requires that you deposit cash money into the account in order to have access to funds via the card.
Most if not all prepaid cards offer a direct deposit option that will allow you add funds without a fee as long as you're depositing a certain amount per month.
If you don't receive direct deposit, fees will apply for reloading your card. Fees usually vary between $4.95 and $9.95 a month.
Green Dot Unlimited - there are several cards that use the Green Dot network for their prepaid credit platforms (ex; like NetSpend and Chime Bank).
SECURED CREDIT CARDS
Similar to a prepaid card, secured credit cards require that you add funds to the account before you can use the card.
Unlike prepaid cards, secured credit allows you to build your credit worthiness over time and provides the option of a credit increase without having to add the funds onto your card first.
Adding funds to an unsecured card usually involves transferring money from a bank account onto the card account.
Find options for secured cards, including monthly fees and interest rate comparisons.
Credit Karma - 10 Best secured cards for bad credit
Nerd Wallet - 9 Best Secured Cards of December 2019
With bad credit, you may be able to qualify for unsecured credit, but this usually requires a higher income.
The company wants to ensure that your income will make up for your lack of credit worthiness. Along with higher income requirements, a bad credit score also means more fees and lower credit limits.
CREDIT CARDS FOR BAD CREDIT
Find options for obtaining a business cards for bad credit. (Some options available on these lists are secured cards).
Bad Credit Options from Mastercard - Mastercard
Credit Cards.com - Best Credit Cards for Bad Credit
Nerd Wallet - Credit Cards for People with Bad Credit
BUSINESS CREDIT VIA YOUR CURRENT BANK
This option is not spoken of often, but if you already have a bank account, an option that provides more opportunity for obtaining an unsecured card is to get credit from your bank.
You bank sees your deposits and withdrawals every month. Along with being able to view your activity, having a current bank account also provides some rest assurance that the company stands a better chance of getting paid back.
Bad personal credit has a great impact on your options. If you have savings or monies set aside to run your business, it may be a good idea to take a look at your personal credit and start to make improvements where you can.
One way to start taking control of your credit worthiness is to obtain your credit report.
You are entitle to a free, non-penalty annual copy of your credit report
Seeing your report will give you a picture of the exact areas that need improvement. Requesting this report annually (every 12 months) that will not impact your score.
This report can be ordered online from AnnualCreditReport.com, the only authorized website for free credit reports, or call 1-877-322-8228.