Startup business owners with bad credit will likely have to consider personal credit cards for their business spending because of the limited number of business-specific options that are available. Personal credit cards for bad credit could be an attractive choice since they come with certain protections not available on business credit cards. Just make sure you use separate credit cards for your business and personal expenses.
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Lenders hold business cardholders personally liable for any unpaid business debt, so when you apply, the lender will review your personal credit history. This is done to project your ability to pay back any business debt. If you are approved, the lender will also require a signed personal guarantee. This assures the lender that the business owner will personally repay any business credit card debt when the business is unable to do so.
How to Get a Business Credit Card with Bad Personal Credit
Submit an application.Depending on the card, you can apply online, over the phone or in response to a targeted mail offer. If your bank or credit union offers a business credit card for bad credit, you may be able to apply in-person. Applying online will usually get you the quickest decision.
Put up the security deposit.This is required by secured credit cards either when you apply or once you’re approved. You can write a check or authorize a one-time electronic bank draft for the amount of your deposit. The security deposit will be returned if your application is denied.
Wait for approval.Unless you have an unresolved bankruptcy or charge offs on your credit report, you stand a very good chance of getting approved for a secured credit card. A decision on your application can take a few seconds or a few weeks.
Wait for your card to arrive.Once you’re approved, your card should arrive by mail within 7-10 business days. Some issuers may expedite shipping of your card upon request. Expedited shipping may cost a fee, but could speed the delivery up to as little as 1-2 business days.
Activate your card.Once you receive your card, call the number/visit the URL printed on the decal affixed to it. If you activate over the phone, you may have to place the call from the number listed on your application for security purposes.
Secured credit cards and unsecured personal cards for bad credit both allow you to establish or rebuild credit as you make business purchases. Unfortunately, there aren’t really any unsecured cards marketed to small business owners with bad credit. You could get a personal credit card for bad credit and put business purchases on it, but unsecured cards for bad credit have expensive annual, monthly and one-time fees. This leaves secured credit cards as the better option.
Ultimately, keep in mind that, with a secured card, there is a required security deposit. It serves as collateral and increases your approval odds since the lender takes on less risk. The card’s credit limit will be equal to the amount of the deposit. Deposits typically start at $200 and are fully refundable when you close your account in good standing.
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