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How to Get a Business Credit Card with Bad Personal Credit

Trying to find out how to get a business credit card with bad personal credit? Despite COVID-19?

How to Get a Business Credit Card with Bad Personal Credit

We researched a bunch of company credit cards for you. So, here are our top picks.

Per the SBA, small business credit card limits are a whopping 10 — 100 times that of consumer credit cards!

This shows you can get a lot more cash with business credit. And it also shows you can have personal credit cards at stores. So, you would now have an extra card at the same shops for your business.

And you will not need collateral, cash flow, or financials to get business credit. But you do need to be fundable. And this is even truer as we seem to be sliding right into a recession.

Company Credit Card Benefits

Benefits can differ. So, make certain to pick the benefit you would prefer from this selection of alternatives. Some of our choices call for better to exceptional credit. So, take this time, as we pause and reflect, to improve your credit.

Be Fundable to Get a Business Credit Card with Bad Personal Credit

The best way to get a business credit card with bad personal credit is to build fundability. But what does it mean to be fundable?

Fundable: of or capable of being funded; deserving of being funded. Fundable also suggests – able to be funded by a lending institution or a credit issuer.

Lenders and credit providers want to see if your corporation is a good credit risk. Firms which are fronting your business cash, they wish to know that you can pay them back. They want to be sure you’re not committing fraud. It all starts with your industry.

Industry

Some industries are believed to be high risk or restricted. These industries, by definition, are going to have a more difficult time getting financing of any kind. There may be high risks of injury at work. Or the industry might engage in a lot of cash transactions. 

Industry Aligned on All Records

This is the idea of congruency, and it turns up repeatedly. Business credit reporting bureaus and lenders will analyze your corporation carefully. Among the major ways they do this is by strictly looking for matching records.

Because of this, if your records do not all match, it will show up as if they are missing. Missing records will trigger a rejection, as a loan provider will assume fraud on its face.

Therefore, it is crucial to make sure that every record, anywhere, is identical.

Copy/paste this info; do not chance it with retyping.

Business Name

Including a risky business type in your corporate name will cause funding rejections. Listed corporate ownership must be the same any place you list it. It is best practices to keep a record of every place where your corporation has a listing.

Establish business credit fast with our research-backed guide to 12 business credit cards and lines. Find out how to get a business credit card with bad personal credit and more.

Website and Email

A business needs a professional-looking site. And it must have site hosting from a provider like GoDaddy. Do not use Weebly or Wix. It needs to be your domain, not domain.wix.com. Use Upwork to employ people who can help you get set up. Get a professional logo from Fiverr. Email must be on your domain.

Business Address and Phone Number

A business address must be a real brick and mortar building. Hence it must be a deliverable physical address. This can never be a home address or a PO Box. Do not use UPS mailing addresses. 

Never use a home address on your application. 

Your corporation must have its own phone number. Do not give a personal cell or residential phone as a business telephone number. But VOIP (voice over internet protocol) is fine.

Also, your corporate telephone number must be toll-free. This is 800 exchange or such. 

You must list your company phone number on 411. You can do so on http://www.listyourself.net. Your phone number has to have a 411 listing for most credit issuers, lenders, vendors, and even insurance companies to approve you. Check your record to see if you’re listed. Make sure your information is accurate.

Time in Business

Incorporation date, the business license issue date, and the date you opened your business bank account all matter.

Business Bank Account

You need a business bank account, to keep funds separate from personal accounts. Keep a good, positive balance and avoid NSFs.

Business Entity

This defines issues of liability, and it makes a difference when it comes to taxes. The best business entity for fundability is a corporation.

Corporations are legally distinct from their owners. Whether you pick a C-corporation, an S-corporation, or an LLC is your choice.Biz Credit Card with Bad FICO Credit Suite

A sole proprietorship means the business owner is it when it pertains to liability and tax obligations. Nobody else is responsible. Incorporating fixes this.

Any complete company name must include any recorded DBA filing you use. This necessary for document congruency.

But no matter what, if you run a small business as a sole proprietor, the best thing to do is to incorporate. If you have already filed a DBA, you will still need to move onto a corporate business entity. You ought to only look at a DBA as an interim step on the way to incorporation.

Check with your Secretary of State to guarantee they have all the needed details for your business. Make certain that you are in good standing with them, and that your entity is active. You must submit annual reports and pay a fee each year to stay active.

EIN #

Go to the IRS website and get a free EIN for your business. This is also where you choose a business entity like corporation, LLC, etc. To open a business bank account, and file business taxes, you need an EIN, so get this out of the way first. 

Business Licenses

A corporation must have all of the licenses necessary for running. These licenses all must be in the perfect, accurate name of the business. And they must have the same corporate address and telephone numbers.

This means not only state licenses, but potentially also city licenses. Check with your Secretary of State’s office.

Business Credit Bureaus

The biggest and best-known business credit reporting agencies (also called CRAs or bureaus) are D&B, Experian, and Equifax.

Business Data Agencies

These companies collect data and offer it to the business CRAs.

CreditSafe provides alternative credit, where they base some of their scoring on utility and rent payments. These payments are typically not considered by other CRAs unless they’re late. CreditSafe reports these payments whether positive or negative. Third-party payments like Credit Suite, CRM, and software can be included.

LexisNexis is where a number of lenders get their info from. They furnish info on likelihood to pay, or not. If the application and LexisNexis do not match, then loan providers will deny you funding. They will see the disparity as fraud.

The SBFE collects data on small businesses from its members, which are lending institutions. Lenders use this information to make credit decisions.

FICO uses its SBSS (Small Business Scoring Service) Score to combine consumer bureau, monetary, application, and business bureau information. 

Business credit providers and the SBA use the FICO SBSS score as a tool to decide whether they should authorize a loan to your business.

Identification Numbers

CRAs use identification numbers to designate your business.

Experian’s BizSource assigns a BIN (Business Identification Number).

Begin at the D&B website and get a free D-U-N-S number. If there is no D-U-N-S number, then there is no record and no PAYDEX score. Your D-U-N-S plus three payment experiences gets you a PAYDEX score.

Business Credit History

Your company credit history is the single most important driver of your business credit scores. In turn, this influences fundability profoundly.

Late repayments will impact your business credit score for years. If you pay your business financial obligations off, as swiftly as possible and as completely as possible, you can make a very real difference in your credit scores. 

UCC Filings

If the business owner has poor personal credit, lenders will typically secure a UCC blanket lien if they give your company a loan.

This is a note on your credit report. It says the financial institution has an interest in all your corporation’s assets till you pay off the loan in full. Therefore, there may be dire consequences if you default.

UCC filings are a matter of public record. Lenders and credit providers take them into consideration when determining if your business is fundable.

Judgments, Liens, and Bankruptcies

These are all a matter of public record, and they can all negatively impact fundability.

Together with UCC blanket liens are any other liens against your corporate assets. A lien is a credit provider’s right to retain possession of property belonging to until the debt owned by that person or business is discharged.

A lien isn’t quite the same thing as collateral – it’s the property which is subject to the lien is the collateral.

Total number of trade accounts and highest credit limit

These come from credit issuers which give you starter credit when you have none. Terms are usually Net 30, versus revolving.

The more trade accounts, the better. But in general, a few high credit limit accounts do more to enhance business fundability than a large number of very low credit limit accounts.

By getting trade credit ASAP, your trade accounts are as aged as they can be.

Establish business credit fast with our research-backed guide to 12 business credit cards and lines. Find out how to get a business credit card with bad personal credit and more.

Financial data

Opening and responsibly using business credit accounts can help you increase your available credit and boost your credit rating. The key is to use your credit. 

Closing accounts has a direct impact on overall credit history. If a card is closed and is in good standing, it will fall off a credit report at some point. And once it’s gone, the history which accompanied it is gone, too. 

By closing accounts, you are tanking the average age of your accounts. It’s a part of fundability over which you have control — simply use your credit and pay it back quickly. In this way, your providers will not feel the need to close accounts for non-use.

Financial Statements

Financial statements include business tax returns. It’s best if these are prepared by an accountant or an accounting company, or at least audited by them.

Tax returns should be complete and up to date. Reported income and expenses should be commensurate with those anticipated from a corporation of your size, age, and industry.

Personal Financials

In particular for newer businesses, credit issuers and lenders will want to see personal financials. This includes taxes and reported income and expenses. Banks will even look at child support and criminal records.

Just like there are business credit reporting agencies, there are CRAs for personal credit. In addition to reporting on business credit, Experian and Equifax also report on personal credit. TransUnion only reports on personal credit. 

Data Agencies

There are companies which collect data and provide it to the personal credit reporting agencies. Some banks and other credit issuers use ChexSystems to get more information on your personal credit habits. They also report on insufficient funds, closed accounts, and overdrafts.

Lenders use LexisNexis information to cross-check loan applications. Your FICO score comes from your payment history, amounts of owed, length of credit history, credit mix, and new credit. 

Personal Credit History

Much like your business credit history matters for calculating fundability, so does personal credit history. Data points like accounts over limit, authorized users, and short sales loom large.

Lenders are looking at settled debt, foreclosures and late payments. They are checking opened accounts and history length. They want to see if there are any bankruptcies in your past.

More than two recent inquiries will be seen as proof of credit shopping. Credit Utilization Rate also matters. Credit Utilization Rate is credit in use, divided by total available credit. Keep this ratio at about 30% or less. Experian checks utilization rate both overall and per credit card.

Application Process

Even the process of applying can have an impact on your fundability. This includes time, negotiations, and whether your application is being made in person. Choosing a lender familiar with your industry makes a positive difference.

Fundability, on Balance

Keep all records consistent to ensure fundability. Set up your business legitimately, with a domain, phone numbers, an address, and more. Get all ID numbers and register with the IRS. Set up your business bank account for fundability. Keep all business financials organized and have them prepared by a competent professional. Get your personal credit ‘house’ in order.

Being fundable means your business can get financing from a credit provider or lender.

How to Get a Business Credit Card with Bad Personal Credit

Capital One® Spark® Classic for Business

Take a look at the Capital One® Spark® Classic for Business. It has no yearly fee. There is no introductory APR offer. The regular APR is a variable 24.49%. You can get unlimited 1% cash back on every purchase for your business, without any minimum to redeem.

While this card is within reach if you have average credit scores, beware of the APR. However if you can pay promptly, and in full, then it’s a bargain.

So find it here: https://www.capitalone.com/small-business/credit-cards/spark-classic/

How to Get a Business Credit Card with Bad Personal Credit, Not Calling for a Personal Guarantee

Brex Card for Startups

Look into the Brex Card for Startups. It has no yearly fee.

You will not need to provide your Social Security number to apply. And you will not need to provide a personal guarantee. They will take your EIN.

Nonetheless, they do not accept every industry.

Also, there are some industries they will not work with, and others where they want more paperwork. Now for a list, go here: https://brex.com/legal/prohibited_activities/.

To determine creditworthiness, Brex checks a company’s cash balance, spending patterns, and investors.

You can get 7x points on rideshare. So get 4x on Brex Travel. Likewise, get triple points on restaurants. And get double points on recurring software payments. Get 1x points on everything else.

Plus you can have bad credit (even a 300 FICO) to qualify.

And find it here: https://brex.com/lp/startups-higher-limits/  

How to Get a Business Credit Card with a 0% Introductory APR – Pay Zero!

Blue Business® Plus Credit Card from American Express

Check out the Blue Business® Plus Credit Card from American Express. It has no yearly fee. There is a 0% introductory APR for the initial 12 months. After that, the APR is a variable 14.74 – 20.74%.

Get double Membership Rewards® points on day to day company purchases like office supplies or client suppers for the initial $50,000 spent each year. Get 1 point per dollar afterwards.

But you will need good to outstanding credit scores to qualify.

Afterwards, find it here: https://creditcard.americanexpress.com/d/bluebusinessplus-credit-card/

American Express® Blue Business Cash Card

Also take a look at the American Express® Blue Business Cash Card. Keep in mind: the American Express® Blue Business Cash Card is identical to the Blue Business® Plus Credit Card from American Express. But its rewards are in cash instead of points.

Get 2% cash back on all eligible purchases on up to $50,000 per calendar year. Then get 1%.

It has no annual fee. There is a 0% introductory APR for the initial 12 months. After that, the APR is a variable 14.74 – 20.74%.

Yet you will need good to outstanding credit to qualify.

So find it here: https://creditcard.americanexpress.com/d/business-bluecash-credit-card/

How to Get a Business Credit Card with Bad Personal Credit for Cash Back

Flat-Rate Rewards

Capital One ® Spark® Cash for Business

Take a look at the Capital One® Spark® Cash for Business. It has an introductory $0 annual fee for the first year. Afterwards, this card costs $95 annually. There is no introductory APR deal. The regular APR is a variable 18.49%.

You can get a $500 one-time cash bonus after spending $4,000 in the first 3 months from account opening. Get unlimited 2% cash back. Redeem any time with no minimums.

But you will need good to superb credit scores to qualify.

After that, find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash/

Flat-Rate Rewards and No Yearly Fee

Discover it® Business Card

Take a look at the Discover it® Business Card. So it has no yearly fee. There is an introductory APR of 0% on purchases for 12 months. After that the regular APR is a variable 14.49 – 22.49%.

Get unlimited 1.5% cash back on all purchases, with no category restrictions or bonuses. They double the 1.5% Cashback Match™ at the end of the first year. Yet there is no minimum spend requirement.

You can download transactions conveniently to Quicken, QuickBooks, and Excel. Note: you will need good to outstanding credit to get this card.

And you can find it here: https://www.discover.com/credit-cards/business/

Establish business credit fast with our research-backed guide to 12 business credit cards and lines. Find out how to get a business credit card with bad personal credit and more.

How to Get a Business Credit Card with Bad Personal Credit for Jackpot Rewards

Capital One® Spark® Cash Select for Business

Have a look at the Capital One® Spark® Cash Select for Business. It has no yearly fee. You can get 1.5% cash back on every purchase. There is no limit on the cash back you can earn. And get a one-time $200 cash bonus once you spend $3,000 on purchases in the first three months. Rewards never expire.

Pay a 0% introductory APR for 9 months. Then pay 14.49% – 22.49% variable APR afterwards.

You will need great to excellent credit to qualify.

But you can find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash-select/

Flexible Financing Credit Cards – Have A Look at Your Options!

The Plum Card® from American Express

Take a look at the Plum Card® from American Express. It has an introductory annual fee of $0 for the first year. After that, pay $250 annually.

Get a 1.5% early pay discount cash back bonus when you pay within 10 days. You can take up to 60 days to pay without interest when you pay the minimum due by the payment due date.

You will need good to outstanding credit to qualify.

But you can find it here: https://creditcard.americanexpress.com/d/the-plum-card-business-charge-card/

How to Get a Business Credit Card with Bad Personal Credit for Luxurious Travel Points

Ink Business Preferred℠ Credit Card

For a fantastic sign-up offer and bonus categories, check out the Ink Business Preferred℠ Credit Card.

Pay an annual fee of $95. Regular APR is 17.49 – 22.49%, variable. There is no introductory APR offer.

Get 100,000 bonus points after spending $15,000 in the initial 3 months after account opening. This works out to $1,250 toward travel rewards if you redeem through Chase Ultimate Rewards.

Get 3 points per dollar of the initial $150,000 you spend with this card. So this is for purchases on travel, shipping, internet, cable, and phone services. Plus it includes advertising purchases made with social media sites and search engines each account anniversary year.

You can get 25% more in travel redemption when you redeem for travel with Chase Ultimate Rewards. But you will need a good to superb FICO score to qualify.

But you can find it here: https://creditcards.chase.com/business-credit-cards/ink/business-preferred

How to Get a Business Credit Card with Bad Personal Credit for You

The way how to get a business credit card with bad personal credit will hinge on your credit history and scores.

Only you can pick which features you want and need. So, be sure to do your homework. What is outstanding for you could be catastrophic for other people.

And, as always, make certain to build credit in the recommended order for the best, speediest benefits. The COVID-19 situation will not last forever.

The post How to Get a Business Credit Card with Bad Personal Credit appeared first on Credit Suite.

How Does Business Credit Work?

Most business owners know that business credit is a thing, but they do not understand how it works.  Many have the idea that all they have to do is apply for credit with their business name to begin building it, but that’s not quite right.  Others have no idea it even exists. You cannot successfully build business credit if you do not understand how it works. So, how does business credit work?

Everything You Need to Know About How Does Business Credit Work from the Ground Up 

The first thing you need to know about how does business credit work is that it does not build passively like consumer credit. You have to actively work to build it. This starts with how your business is set up.  It needs to be set up to be a fundable entity separate from you personally. This is for many reasons, but for business credit it keeps your business and personal credit from getting all mixed up. 

How to Build a Fundable Foundation for Business Credit

We like to call this a “fundable foundation” or a “foundation of fundability.”  Basically, it is setting up your business in a way that makes it appear legitimate and credible.  Some of the factors that go into this are common sense, others may surprise you.

How Does Business Credit Work?  Contact Information

The first step in setting up a foundation for business credit is to get your business its own phone number, fax number, and address.   Surprisingly, this doesn’t mean you have to get a separate phone line, or even a separate location.  You can run your business from your home or on your computer, and you do not even have to have a fax machine.  Find out more about how this works here and here. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit. 

How Does Business Credit Work? EIN

Your business needs and EIN.  This is an identifying number for your business that works the same way your SSN works for you personally.  It looks more credible to use this number rather instead of your SSN for business loan applications.  Having an EIN is also important for building business credit, as it separates your business accounts from your personal accounts. You can get one for free from the IRS.

How Does Business Credit Work? Incorporating

Incorporating your business as an LLC, S-corp, or corporation is necessary for building business credit.  It offers some liability protections, but it also separates your business from your self for definitively, which is essential to the business credit building process. 

Which option you choose has more to do with your budget and how much liability protection you need than it does for business credit and fundability.  The best thing to do is discuss the issue with your attorney or a tax professional.  

Incorporation has to happen as soon as possible.  Time in business counts, and it starts over at incorporation.  This is true regardless of how long your business has been in operation before incorporation.  Not only that, but any positive credit history you have related to your business up until the point of incorporation will be lost as well.

How Does Business Credit Work? You Need a Business Bank Account

You have to open an official business bank account.  There are a few reasons for this.  First, it even further establishes your business as a separate entity. Next, it will help you keep personal and business finances separate.  This is beneficial for tax purposes. 

In addition, there are several types of funding that will not be available to you without a business bank account.  Some lenders and credit cards want to see one.  Also, it’s not possible to get a merchant account without a business bank account. That means, you will not be able to take credit card payments.  Consumers tend to spend more when they can pay by credit card.

How Does Business Credit Work? Having the Proper Licenses Matters

A business has to have all of the necessary licenses it needs to be fundable.  If it doesn’t, red flags are going to fly up all over the place.  Do the research you need to do to ensure you have all of the licenses necessary. 

How Does Business Credit Work? A Professional Website is Important

You would probably never dream that your business website could affect your ability to get business credit. However, in today’s world, we all run to the internet first for virtually everything.  Often, the website is the first impression your business makes on customers and even lenders.  A poorly put together website does not make a good impression.

Spend the time and money necessary to ensure your website is professionally designed and works well.  Do not use a free hosting service.  Rather, pay for hosting. Along these same lines, your business needs a dedicated business email address.  Make sure it has the same URL as your Website.  Free email services such as Yahoo and Gmail are not sufficient.

How Does Business Credit Work? D-U-N-S Number

If you do not have a D-U-N-S number, you will not have a credit file with Dun & Bradstreet.  Since they are the largest and most commonly used business credit reporting agency, that would seriously affect your business credit potential. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit. 

It’s free and easy to get a D-U-N-S number.  You just go here.  However, be aware that they will try to sell you a number of other products that you do not need.  Just put your blinders on and keep pressing toward the goal of getting that number, which again, is free. 

How Does Business Credit Work? Next Steps

After you have your business set up as a fundable entity, you will have to get accounts reporting to the business credit reporting agencies (CRAs.)  It’s not as easy as just applying for credit and making payments. Here’s why. You have to have business credit to get business credit. Until you have and established score, most lenders will not approve you for funds.  

How do you get around this? The first thing you can do is talk to those vendors you already have a relationship with. With an established relationship, they may be more likely to extend credit without a credit check.  Be sure to ask them if they will report however, because if they will not it doesn’t matter. 

You can also ask utilities and other monthly payments to report.  Electric companies, phone companies, and even internet providers might report your payments if you ask.  They don’t have to, but it can’t hurt to try.

In addition, there’s a little secret known as the vendor credit tier.  These are starter vendors that will award net terms on invoices without a credit check, and then they will report your payments to the CRAs. This will get the ball rolling. 

How do I Find Starter Vendors?

Vendors that fall into the vendor credit tier do not necessarily advertise themselves as such.  As a result, they can be hard to find on their own. Here are a few options to get you started. 

Grainger Industrial Supplybiz credit explained Credit Suite

Grainger sells power tools, pumps, and hardware among other things. You can apply by fax or phone. If you need less than $1,000 in credit, you only have to have a business license for approval. For over $1,000, you will need trade and bank references. 

If you are just starting out and do not have references, the $1,000 is plenty to get you started building business credit. Go here to get started. 

Quill Office Supplies

Quill is popular and easy to get started with. They sell office supplies as well as cleaning and packaging supplies. Generally, you can get most of what you would use in the everyday running of a business from them. 

They report to D&B. If you do not already have a D&B score, you will have to place an initial order first. Typically, they establish a 90-day prepay schedule.  Then, if you order each month for three months, they will approve you for a Net 30 account.

Get started with Quill here.

Uline Shipping Supplies

Uline reports to Dun & Bradstreet.  They carry shipping boxes, dollies, janitorial supplies, and more. Since they report to D&B, you have to have a DUNS number before you get started with them. They will also ask you for a bank reference and two other references. In the beginning, you may need to prepay before they will approve Net 30 terms. 

Find out more about Uline here. 

Behalf.com

Behalf is way of getting paid through an app, but they funding as well. The more often you have customers pay through Behalf, the more likely they are to offer you favorable funding terms.

They offer both purchase financing and virtual MasterCard options. Terms run from Net 30 to 180 days, and they report to Dun & Bradstreet, Experian, and Equifax. This fact alone, that they report to all the major credit reporting agencies, makes them extremely valuable when building business credit.

Find out more here. 

How Does Business Credit Work? The Other Credit Tiers

The vendor credit tier is like a gateway tier to the other credit tiers.  It goes a little something like this. 

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. For example, Lowes falls into this tier and reports to D&B, Equifax and Business Experian. They need to see a PAYDEX score of 78 or higher. The PAYDEX score comes from D&B, so you need a D-U-N-S number for anyone that uses PAYDEX.  Most do.

Fleet Credit Tier

Once you have enough retail accounts reporting, move to the fleet credit tier. This is credit that you can only use to buy fuel, and to fix or maintain vehicles. One example is Shell, who reports to D&B and Business Experian.  They want to see a PAYDEX Score of 78 or better and a 411-business phone listing. 

In addition, Shell might say they want a certain amount of time in business or profits. But if you already have sufficient vendor accounts, that may not be necessary. 

Cash Credit Tier

Here is a good example of how business credit works.  If you handle your credit responsibly in the other tiers, you can start to apply for cards in the cash credit tier. 

These are service providers such as Walmart and Dell, and also Home Depot, BP, and Racetrac. They are usually MasterCard credit cards. If you have 14 trade accounts reporting, then these are in reach.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit. 

How Does Business Credit Work? The Application Process

Having your business set up properly is only the first step.  Once you start applying for business credit you have to use your business information.  Use your business address, business phone, and EIN. Do not use your SSN as part of the credit application, but be aware that they may ask for it, along with your birthday, for identification purposes due to fraud concerns. 

By using your business information and not your personal information, you ensure your business credit transactions are not mixed up with consumer credit transactions.

Business Credit is Just One Part of Fundability

Fundability is composed of many layers, and business credit is just one part with layers all its own.  It is a large part of fundability, but there is a lot more out there. One thing is for sure, you have to have the same foundation for both business credit and fundability, so it’s best to take care of that part as soon as possible.  To find out more about fundability and what affects it, go here.  

Why Is Business Credit Important to Fundability?

When you look at fundability, personal credit affects it as well.  Knowing that, it’s natural to question why business credit matters at all.  Why do we need two different kinds of credit? There are few reasons, but two of them are glaring once you understand how it all works. First, it costs a lot to run a business, and personal credit limits are not as high as business credit.  If you try to put business expenses all on personal credit, you are going to hover near your limits, which will have a negative effect on your personal credit score. That could keep you from being able to get a loan for a house or a car due to simply running your business. 

Also, if you have a good business credit score, you will likely have higher credit limits available to you. This will help ensure you have access to the funds you need to run and grow your business. 

How Does Business Credit Work? It Is a Process

When trying to answer the question of how does business credit work, you have to remember that it’s not a short answer.  There is a process that has to be followed. It starts at ground level with the foundation. Then you have to travel up several credit tiers, using your credit responsibly and making payments on time as you go.  This will ensure you build a strong business credit score that will only increase your fundability. 

The post How Does Business Credit Work? appeared first on Credit Suite.

Business Credit Card Rates: Everything You Might Need to Pay

Find Out What Hidden Business Credit Card Rates to Look For and How to Avoid Them

Credit cards are a fact of life for most small businesses.  They get a bad rap, but used properly they can be hugely beneficial.  It is a precarious walk on a balance beam, however, to balance the benefits versus the cost.  When you think of business credit card rates, the first thing that comes to mind is probably interest rates.  These are, of course, one of the largest costs of credit cards.  They are also widely variable, ranging from as low as 0% for an introductory rate to almost 30% in some cases.

There are many more costs that can be associated with these cards however.  So many in fact, that many business owners do not even realize the business credit card rates they are paying.  It can be frustrating to continually make payments yet never see a corresponding decrease in the balance.  We dug in to find out everything you need to know about the business credit card rates you know, those you don’t know, and how to handle or avoid each one.

Business Credit Card Rates: The Devil You Know

Here are some common business credit card rates you are probably familiar with, and some tips on how to save on each.

Check out our professional research and score the best business credit cards for your business.

Interest

This is a given with any credit card, and most likely the number one cost most associate with them. The only way to avoid it is to pay off the entire balance every month.  Short of that, it cannot be eliminated.  It can be reduced however.

First, keep your personal and business credit score strong.  The better the score, the lower the interest rate options available to you.  Then, shop around. Just look for the cards with the best rates.  Be aware however, many lower rates are promotional only, so they will go up after a set period of time.

Annual Fees

When it comes to business credit card rates, this one is no secret either.  Many cards charge an annual fee for the administration of the account. Most often they are associated with cards that earn rewards such as miles or points that can be converted to gift cards, airline miles, or cash back.  The key to keeping annual fee costs to a minimum is to simply use cards that do not charge this fee.

If, however, you find a card with a fee that has rewards that you will use to the point that you recover the cost of the fee plus some, then the benefit may outweigh that cost.  There could be other benefits associated with a card that charges a fee as well.  A cost-benefit analysis based on your specific business situation is the only way to know if it is worth it.

Late Fees

This one is self-explanatory. Late fees are charged to your card when you pay after the due date.  The best way to avoid them is to not pay late.  However, know that if you do pay late and it is a first offense, you may be able to have that fee removed.  You have to call and ask.  It doesn’t always work, but sometimes it does for a first offender.

Hidden Business Credit Card Rates

Now for the part you are really wondering about.  What are you paying that you do not realize?  How much could you save if you knew about these things and either avoided them or chose cards that did not charge them?  Here are the hidden costs to look for, and how to reduce or avoid them all together.

Balance Transfer Fees

These are fees on balances that you transfer from another card.  Typically this would be done in an effort to get a lower, promotional interest rate on the balance transfer.  Usually the fee is a percentage of the amount being transferred with some minimum.  So if, for example, you were to transfer $3,000 and the transfer fee was 3%, your balance on the new card would increase by $3,090.

The only way to avoid this is to not do a balance transfer.  Of course, there could be cases where the savings with the promotional rate makes it worth the fee.  That will have to be determined on an individual basis.

Cash Advance Fees

These are just as they sound, fees paid on cash advance funds.  Similar to balance transfer fees, they are typically a percentage of the advance.  Cash advances can come in the form of cash advance checks that you simply write and deposit into your account, or funds that you get from an ATM with your credit card and a cash advance PIN.  If you do not do cash advances with your credit card, you do not have to worry about this fee.

Reward Redemption Fees

Did you know that sometimes you have to pay a fee on rewards that you earn?  The credit card companies say that this is to pay for the processing of the rewards.  Avoid these fees by reading the fine print in the rewards section before you apply for the card.  Most do not even know that these fees exist, and sometimes they end up costing more than the rewards are even worth.

Reward Recovery Fees

This fee is closely related to late fees.  Some cards revoke rewards earned during the month if you are late on your payment for that month.  They then charge a fee to reinstate those rewards.  To avoid this fee, be sure to pay on time.

Inactivity fees and Account Closure Fees

The inactivity fee is assessed after you go a certain length of time without any activity on the card. Most often that amount of time is one year.  The first thing you have to do to avoid this fee is know which cards have if. After you determine that, figure out the minimum you must spend in a year to avoid the fee.  Then, either make certain you spend that amount, or cancel the card.

Beware however, because some cards do charge a fee for closing accounts.

Payment Protection

Most cards offer a payment protection plan.  This is basically insurance that will cover your payments in the event you become ill or unemployed.  While is sounds great, it can be quite expensive and add up quickly. Avoid it by either opting out on the front end, or canceling it if you already have it and do not want to pay it.

Paper Statement

The push to save the environment is a noble one, and the credit card companies are doing their part.  One way they are doing this is by charging a fee for paper statements.  You can opt in for electronic statements and avoid paying the fee.

Foreign Transactions

Did you know that if you use your credit card to pay for goods from a company that is not located in the United States, you may have to pay a fee for that transaction?  This is true even if you never leave the country, and even if you do not know the other company is foreign.  Read the fine print about fees before making any purchases from companies you are not familiar with to determine if this will be an issue.

Taxes on Rewards

While this isn’t exactly a credit card fee, it is a potential hidden cost of using credit cards.  There are times when, depending on how rewards are earned and how they are used, that you may have to pay taxes on them.  Find out more about this and how to avoid it here.

Check out our professional research and score the best business credit cards for your business.

Here’s the big key to avoiding unexpected fees and costs.  Know what to look for.  Now that you have a list of the most common hidden credit card costs, you can be diligent to pay close attention on the front end and not apply for any credit cards that charge fees you do not want to pay.

No one wants to pay more than they have to.  On the other hand, some of these fees may be worth it to you to pay depending on the benefit associated with it and whether or not your specific business could benefit.  For example, if you have a chronic health issue, it may be worth it to you to pay for the payment protection plan.

Why Business Credit Card Rates May Be Worth It: Benefits of Business Credit Cards

While all these costs can make it seem that credit cards are the devil, and though they do get a bad rap, there are actually plenty of benefits to using business credit cards. Here are just a few:

  • Build business credit
  • Finance business needs without the hassle of a loan, including:
    • Taking advantage of special bulk pricing
    • Equipment maintenance and repair
    • Working capital
    • Unexpected, or expected, cash gaps
  • Use rewards to reduce costs

Of course, we all know credit can get out of hand, but used properly and with the proper attention to business credit card rates, they can be an amazing tool for your business.

How Can They Help Build Business Credit?

Not only can these cards help you build business credit, they are actually vital to the process.  Of course, regardless of the business credit card rates, you will have to have business credit to get business credit.  That is why you start with vendors in the vendor credit tier first.  These vendors will give you net 30 terms on invoices and report those payments to the credit reporting agencies, without a credit check.  After you have enough of these accounts reporting, you will have enough business credit to apply for your first business credit cards.

You’ll start with store cards.  Cards tied to retail stores such as Best Buy, Office Depot, and Lowes will approve accounts with very new business credit earned from accounts in the vendor credit tier.  They will also report payments to the credit agencies, which will further grow your score

After enough of these are reporting, you can apply for cards in the fleet credit tier and the cash credit tier.  As these cards report your on-time payments, your score will only grow stronger.  This will also mean you start getting offers from cards with more favorable business credit card rates, such as lower interest. Find out more about the credit tiers and building business credit using credit cards in each one here.

Side Note: Hidden Business Credit Card Rates When Accepting Credit Cards

Just as there are hidden fees when it comes to using credit cards in the course of your business, there are also hidden rates on the other side.  If you accept cards as payment in the course of your business, be aware of these little-known costs.

Manual entry fee

Did you know that it costs your business more in credit card processing fees if you manually enter the credit card number rather than swiping it?  It’s because of the increased security risk.  If at all possible, make sure customers swipe instead of type in the number.

Check out our professional research and score the best business credit cards for your business.

Below Limit Costs

Okay so this isn’t an “extra” fee per se, but it is a definite cost.  It is entirely possible that you can lose money on a credit card sale if it doesn’t hit a certain dollar amount.  This is because the business credit card rate on processing that transaction may actually be more than the profit earned from it.

That’s why you see many businesses, such as donut shops and other businesses with frequent low dollar amount purchases, require a minimum purchase if you intend to use a card.  This not only avoids the problem of losing money on low dollar amount purchases due to processing fees, but it can increase profits when you consider the number of people that do not carry cash.

Stop Paying Business Credit Card Rates You Do Not Know About

It is impossible to find a card with no unsavory fees.  The key is to determine which ones are worth it to you to pay.  Then, apply only for cards that charge business credit card rates you are willing to pay.  The credit card industry is fiercely competitive, and if your business credit score is solid, you can have your pick of the cards that will work best for you.

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