For a first time applicant, your chosen credit card company would be checking on your personal credit history before granting you an approval. In the absence of a business credit, the applicant’s personal credit would be used instead. What if you have a poor credit history? Does this mean you can’t enjoy the benefits of owning a business credit card?
The good news is, it is still possible to obtain a business credit card even if you have bad credit. For people with less than perfect credit, a secured business credit card is the answer. What are secured business credit cards and what are the differences between secured and unsecured business credit cards?
Differences of Secured and Unsecured Credit Cards for Business
Secured business credit cards are specially created for people with imperfect credit. By submitting a security deposit in their savings account, the credit card provider can have an assurance that this business owner would not default on his payments.
Unlike an unsecured business credit card, the credit limit given to a secured business depends on the amount of deposit submitted as security. The money you deposited in your account is held by your bank just in case you fail to keep up with your payments. This is why the credit limit for a secured credit card is often lower than the credit limit provided for unsecured accounts.
Nevertheless, it is great to know that the money you deposited in your secured credit card account earns interest too. Thus, by making sure that you will not default from your credit card debts, you have the option to claim your security deposit plus interest in the future.
Once you’ve been approved for a business credit card, it’s time to start building our business credit. By submitting your payments on time and avoiding late payments, you can be assured that you’ll be building an excellent credit history for you and your business. Be sure to stay within your allowable credit limit as well. Remember that going over the limit will only cost you penalty fees and could have a negative impact on your credit rating.
Most secured business credit cards require an annual fee from its members so you would want to take extensive research in finding one that offers the most reasonable fees.
Being a business owner, you should not let bad personal credit keep you from obtaining a business credit card and establishing a credit history for your business. Establishing an excellent business credit will enable you to upgrade your credit card to an unsecured account. Secured credit cards are available in the market and all you have to do is choose the credit card company with the best offer.