How to get a business credit card with bad personal credit

Although an impressive credit history and a high credit score aren’t required to start a business, they can certainly make it easier to access the funds you need to fuel your growth. For instance, as a business owner, you may eventually want to borrow money to pay for the costs of a launch, manage ongoing operations or expand your advertising campaigns. A high credit score and a lengthy credit history in your personal profile makes it more likely lenders will approve your request.

Your past business credit history may also be relevant. If your business has yet to start, you won’t have a business credit profile that can help you qualify for credit products. In this case, lenders will likely assess your personal creditworthiness to determine qualifications and set terms. As a result, you may run into issues if you have bad personal credit due to mistakes you’ve made in the past.

Fortunately, you can overcome the problems associated with bad credit to qualify for a business credit card — or a business loan, if one is necessary, too.

What credit score is required for a business credit card?

If you haven’t had a chance to build business credit, your issuer will rely on your personal credit score to make a decision about your application. The best business credit cards on the market today require good credit to excellent credit — or a FICO score of 670 or higher. Business credit cards with exceptional rewards and perks may even require a credit score of 700 or higher.

Many business credit cards also require a personal guarantee. A personal guarantee ensures that if your business doesn’t succeed, you’re still legally responsible for paying the debt out of your personal funds. This lessens the risk your creditor is taking on in extending credit to you.

Can I get a business credit card with bad credit?

The good news about getting a business credit card when you have less-than-stellar credit is that, while they may not be perfect, there are options out there. Not only can you find business credit cards for fair credit, but there are business credit cards that don’t require a credit check at all.

An example of a business credit card for less-than-perfect credit is the Capital One Spark Classic for Business*, which Capital One says is geared toward fair credit borrowers, which the issuer defines as someone who has defaulted on a loan in the past five years or has limited personal credit history.

For business owners with poor credit, the Revenued Business Card may also be an option. This card doesn’t require a hard credit check at all, and it offers cash back on all purchases. There are also a range of secured credit cards for business that can work for business owners and entrepreneurs who have low personal credit scores. The following tips can help you find a card that works for you and your business, even if you have bad personal credit.

How to get a business credit card when you have bad personal credit

Although you can use a personal credit card for your business, you’ll likely find it advantageous to get one specifically for businesses. After all, business credit cards offer benefits that are designed to help business owners with everything from accounting to expense management. To get a business credit card, start by following these steps:

1. Check your credit reports and score

Pulling your credit reports can help you identify what’s dragging your credit scores down. You can get a report from each of the three credit reporting agencies — Experian, TransUnion and Equifax — through a federally-backed website called AnnualCreditReport.com.

The information listed in the sections for trade lines, public records and credit inquiries of your credit reports are all inputted into the agencies’ scoring models, so read your reports carefully. If you spot any errors, file a dispute with each credit bureau report that lists incorrect information, as well as the company that is reporting the incorrect information in the first place.

You’ll also want to check your personal credit score, which you can do for free through a number of platforms. Once you know where you stand, you can take steps to build your credit over time. For the best approval odds, aim for a credit score of 700 or higher — or a credit score in the good range.

Here’s a breakdown of the FICO scoring ranges:

• Excellent: 800 to 850
• Very good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 300 to 579

2. Build up your personal credit score

To improve your personal credit score — even if your report includes negative data — you need to be strategic with how you use available credit and avoid the biggest pitfalls having access to credit can bring. Consider these tips to add depth to your credit history and build credit over time:

• Apply for a secured credit card: You can begin building personal credit with a secured credit card that requires a cash deposit as collateral. These cards typically require refundable deposits with minimum deposits of around $200. Just like standard credit cards, they’ll report your card usage to the major credit bureaus, so if you use your card responsibly, your score should rise. Just keep in mind that while it is easier to get approved for a secured credit card, it’s not guaranteed. The issuer still has the final say on whether to give you a card.
• Open a credit-builder loan: Credit-builder loans are popular alternatives to credit cards. They require you to make fixed monthly payments for a set period, and at the end of the period, they give you your funds. While you’re paying off the loan, the lender will report your payments to the major credit bureaus. This can help you improve your score if you maintain a positive credit history.
• Pay all credit accounts on time: Late payments will damage your credit score — especially if you’re constantly making late payments or if your accounts are seriously delinquent. Establishing a perfect payment history from this point forward will help mend that damage.
• Reduce credit card debt: If you have credit cards that are maxed out, reduce the balance to well below the credit limit as quickly as you can. Most experts recommend owing less than 30 percent of your available credit limit — or less than $3,000 for every $10,000 in revolving credit limits you have access to.
• Consider opening a personal credit card: Many credit cards for those with bad credit are geared toward consumers, not businesses. Once you have a card, choose a small bill to charge each month, then pay it off in full and on time to build up a positive credit history. Using credit wisely and with limits can help you build credit without going into debt.
• Add utility and cellphone accounts to your report: The more on-time payments you have on your credit report, the better. While there are several credit building apps to consider, Experian offers the free Boost program that allows you to add non-credit accounts to your file. Those payments should help increase your FICO credit score by at least a few extra points.

3. Compare business credit cards that you’re interested in

As you work on your credit score, you can begin looking for cards that suit your business needs. Here are some questions to keep in mind as you shop around:

• Do you want a standard credit card or a charge card? Some of today’s best business cards are actually charge cards. With a charge card, there is typically no preset credit limit, and you must pay the entire balance within about 30 days of purchase. Credit cards come with a credit limit and will require you to pay at least a minimum requested payment with each statement. If you don’t pay in full, you’ll have to pay interest on your balance.
• What kind of rewards do you want to earn? Almost all business cards offer rewards programs, although your chance at rewards are slimmer if you have a low credit score. You’ll want to prioritize raising your score over getting rewards if that’s the case. Depending on the cards you qualify for, you may be able to get one that offers boosted rewards on office products, for example. If you think traveling will be in your future, concentrate on a business card that gives you travel perks related to flights, airport amenities, hotels and car rentals.
• How does each card’s sign-up bonus compare? Many  business credit cards offer excellent sign-up bonuses, which will allow you to earn a large amount of points, cash or miles after spending a certain amount within a specific time frame after card activation.
• Do you have large upcoming purchases or startup costs? Some business cards also feature 0 percent introductory APR offers on purchases for a fixed number of months, which can give you breathing room to pay for your venture’s needs before you have to start paying interest. As long as you pay the debt in full before the regular APR kicks in, you won’t pay interest on your purchases.
• What kinds of fees does the card have? Finally, read the fine print of each credit card and note down the different fees, like annual fees. Your finances and spending habits will determine whether those fees are worth carrying the card.

4. Find a business credit card you can qualify for

There are plenty of good business cards for people with bad credit to consider. But, if you’re able to build your score to at least the good credit range, you may be able to start looking into the best small business credit cards on the market. Once you’ve given yourself plenty of time to compare options, make sure you can meet a business card’s requirements before submitting an application.

Just be aware that any business cards you get remain your personal responsibility. Even if it’s in your business’s name, you’ll likely be on the hook for all payments and any outstanding debt.

To find cards you qualify for, you can go directly to an issuer’s website and see if you prequalify for their credit cards, or you can use a third-party tool like Bankrate’s CardMatch. With CardMatch, you’d get to see personalized offers from multiple issuers — offers that have already taken your credit score into consideration.

Best business cards for people with bad personal credit

If you have bad personal credit and you need a business credit card, the following options could work for your needs.

Capital One Spark Classic for Business

• No annual fee
• Earns 1 percent cash back on everyday purchases and 5 percent cash back for hotels and car rentals booked through issuer’s travel portal
• No foreign transaction fees

The Capital One Spark Classic for Business offers 1 percent cash back on all purchases with no annual fee required. This business credit card is also unsecured, and it’s available to people who’ve made some credit mistakes in the past. Its starting credit limit may be as low as $300, however, depending on your credit score.

Bank of America Business Advantage Unlimited Cash Rewards Secured credit card

• Earns 1.5 percent cash back on all purchases
• Minimum security deposit of $1,000 required
• No annual fee

The Bank of America® Business Advantage Unlimited Cash Rewards Secured* credit card is a secured credit card for businesses, so collateral is required upfront (in this case, a minimum security deposit of $1,000). This card does offer unlimited 1.5 percent cash back on all spending, and Bank of America says it periodically reviews your account to see if you’re eligible to upgrade to an unsecured card.

Other perks you’ll get include cash flow management tools, several travel insurance benefits and free access to your business credit scores through Dun & Bradstreet.

Business Edition Secured Mastercard Credit Card

• Security deposit between $2,000 and $10,000 required
• Earn interest on your security deposit
• $39 annual fee

The Business Edition® Secured Mastercard® Credit Card* from the First National Bank of Omaha lets you request your own credit limit between $2,000 and $10,000 when you put down a security deposit of the same amount. Cardholders also earn interest on their deposit as they build credit for the future.

A $39 annual fee applies, but this card helps small business owners seamlessly track and monitor spending. Other perks cardholders receive include cash flow management tools, mobile receipt management and discounts on QuickBooks and TurboTax.

Need more business financing? Look into loans.

Credit and charge cards tend to be useful for short-term financing, while business loans are preferable for big-ticket expenses that you want to pay off over several years.

To get a business loan with the best terms, it’s best to wait until your credit is in decent shape. However, if you need to borrow a significant amount of money right away and then pay in equal installment payments, you can find startup business loans for bad credit.

Loans with no credit checks still pass through an approval process, but the lender analyzes your assets and income for approval instead of your credit history. If it appears that you can make the payments that are associated with the loan, you have a better chance of approval. Other lenders do check credit reports and scores, but the standards for qualification are low.

In either case, loans that are developed for people with bad credit tend to be smaller and come with higher interest rates than those for people who have good credit.

Whichever loan you get, simply pay it off according to the agreement. Assuming the lender sends information to the credit reporting agencies (most do, but if you get a “no credit check loan,” ask the lender to be sure), it will help your credit score grow.

The bottom line

To qualify for a business credit card, take action to improve your personal credit history. Shape up your FICO score and identify the best business card for your needs. For larger financial needs, consider a personal loan instead.

Take these simple steps, and you’ll not only repair your bad credit, but you’re also set on the path to apply for stronger credit products for your business.

*Information about the Capital One Spark Classic for Business, Bank of America® Business Advantage Unlimited Cash Rewards Secured and Business Edition® Secured Mastercard® Credit Card has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.

Frequently asked questions (FAQs) about getting business credit cards

• Does personal credit matter when applying for a business credit card?

  Many business credit cards do a personal credit check when you apply, and most also require a personal guarantee. These are good reasons to work on improving your personal credit score before you open a business.

• Which credit report is checked when you apply for a business card?

  It depends on the creditor. Some check only one of your credit reports when you apply for a business credit card, while others check several reports. Unfortunately, you may not know which credit report creditors will use before you apply, though you can ask.

• Do secured business credit cards require collateral?

  Yes. Even the best secured business credit cards require you to put down a cash deposit as collateral. While putting down collateral for a business card may not be ideal, these cards offer the convenience of using a credit card for purchases while giving you the chance to prove your creditworthiness.