Getting a business credit card can be much like getting a personal one. In order to build a credit history, you need a credit card. In order to get a credit card, you need a credit history.
If you are starting a new business, lenders may look at your personal credit score before deciding to approve you.
If you find yourself with poor or limited credit history, it can make getting a business credit card difficult.
However, you still have options. Read below to find out how to get credit cards for new businesses with no credit history.
Why Do You Need Credit Cards?
Can’t you just use debit cards and cash? Ultimately, yes, but you won’t be able to grow your business.
You need to be able to grow your business’s creditworthiness. Doing so will allow you to take advantage of better funding opportunities in the future.
For example, you may be able to secure loans at more reasonable rates.
Your business will also be more appealing when it comes to opportunities for partnerships and expansion. Having credit creates a sense of legitimacy about your organization.
Additionally, you will be able to make the mental transition into running a business.
Having a business credit card simplifies bookkeeping. All large and important transactions can easily be found on one monthly statement.
You can set spending limits and pay all monthly expenditures in one transaction.
Secured Credit Cards for New Businesses With No Credit History
One of the top options for new businesses with no credit history is secured cards. These cards do not require you to have a credit history.
In order to get a secured card, you will need to provide a deposit. This will act as collateral in the event that you default on the payments.
The lending company can use the deposit if you fail to make monthly payments.
The deposit is refundable but may be the total amount of the line of credit.
Otherwise, secured credit cards work just like any other card. If you prove trustworthy, the lending company may offer you an unsecured card.
Boost Your Chances With a Partner
When you apply for a business credit card, lenders will often look at your personal credit report. If your credit is poor or limited in history, you will face difficulty.
However, if you have a business partner with better credit, they can apply for the card. They are more likely to get approved.
Once approved, they can add you as an authorized user. This will help your business, and you will be able to build your personal credit.
Report to Major Credit Bureaus
If you need to build your credit history, you can record your business payments with any of the major credit bureaus. These are TransUnion, Equifax, and Experian.
These are the major three credit bureaus, but there are a number of other smaller ones. These agencies track your credit and assign you a credit score.
The idea here is to demonstrate you are responsible and can make payments on time every time.
If your payments are recorded with these credit bureaus, you can build up your credit. Once you have a substantial credit history, you will be more likely to be approved for a credit card.
Build Your Personal Credit First With Secured Cards
If you’re thinking of starting a new business, you should be aware that you will need a credit card. If your personal credit history needs work, take this into consideration.
If you already have a consumer credit card, you may need to focus on paying it down before applying for a business credit card.
If your personal credit history is limited, take steps to build your personal credit. You may need to apply for a secured card for personal use.
If you can stay on top of your payments, you will build your credit quickly. You will be doing yourself and your business a huge favor.
Tips for Building Credit
Knowing how to take care of your credit is essential to ensuring a healthy financial life. Having good business credit will help you secure loans and more competitive rates in the future.
Make sure all of your payments are made on time. This factor will influence your credit the most.
It is best to keep your account balances low. Too much debt will negatively impact your credit score. This is because higher account balances increase your credit utilization ratio.
Aim to keep your account balance below 30% of your total credit line.
Remember that you cannot avoid using a credit card. A credit card is a credit-building tool.
You must use your credit account balances in order to build credit. If they are left unused, you will not be able to prove your creditworthiness.
If you use your credit card responsibly, you will be able to build your credit history.
Apply For One Business Credit Card
While you build your credit, you should start with only one card. This will give you time to build your credit history and prove your creditworthiness.
Focus first on handling one business credit card. Once you build your business’s credit history, you will be able to expand to more than one credit card.
That is if your business requires it.
Build Your Business’s Creditworthiness
In order to make the transition from having a hobby to running a business, you will need a business credit card. When you start a new business, getting approved for a business credit card can seem like an impossible task.
However, you do have options when it comes to getting credit cards for new businesses with no credit history.
You can apply for secured cards, with a partner, or report business expenses to credit bureaus.
If you are responsible, you can build your credit and improve the financial health of your business.
Make the transition from hobby to business and grow your business. To learn more about growing your business, check out more of our articles here.