Ryan P Page, Staff Writer
@ryan_page
A secured business credit card works by requiring a business owner, an authorized representative of a business, or a person earning income as a sole proprietor to put down a refundable deposit to open the account. The deposit amount becomes the credit limit and gets refunded when the account is closed in good standing.
How Secured Business Credit Cards Work
- You need to apply for the card first. Once you find a card you are interested in, fill out an application and submit it to the issuer. You will need to be the owner, an officer, or managing partner of a business to apply. Since it is a secured card, you can get approved with limited or bad credit.
- Place a deposit to. Like all secured credit cards, you must pay a deposit before the issuer will mail the card to you. The minimum deposit amount will vary depending on the card, but the payment is refundable and will be used to set your card’s credit limit.
- On-time payments can help you build credit. Most business credit cards will only report your account information to the business credit bureaus – Equifax, Experian, and Dun & Bradstreet – and not to the credit bureaus that handle your personal credit. However, there are some that will report to the personal credit bureaus. Credit reporting practices will vary depending on the credit card you have. Paying off your balance and making on-time payments are both great ways to build your credit over time.
People with damaged credit looking for a way to separate their business expenses from their personal accounts can certainly benefit from a secured business credit card, but they will have limited options. There aren’t many secured business credit cards currently accepting applicants.
That said, there are no laws saying business expenses must be charged to a business credit card rather than a regular consumer card. You could simply use a personal card (secured or unsecured) for your business expenses.
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People also ask
Do secured business cards build business credit?
Yes, secured business cards build business credit. Some of the best secured business cards currently available report information to business credit bureaus, helping you build business credit. These cards include the Business Advantage Unlimited Cash Rewards Secured credit card and the First National Bank of Omaha Business Edition® Secured Mastercard® Credit Card.
Building business credit is different than building personal credit. The major business credit bureaus - Dun & Bradstreet, Experian, and Equifax - compile information about businesses differently than credit bureaus do about consumers. So, there may be additional steps to take in order to build...
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