Small and large businesses have the option of business credit cards. They offer a variety of practical benefits, as well as the opportunity to improve credit. However, they can be extremely expensive, especially if overspend. Hence, you should compare several business credit cards before making your decision. Here are some things to keep in mind while applying for a business credit card with bad credit.
Businesses of all sizes can apply for business credit cards
It is easy to get a business credit card from many lenders. Similar to applying for a personal credit cards, the process for business credit cards is also similar. Your Social Security number and employer identification number will be needed. However, the application process for business credit cards is typically automated and results in an instant credit decision.
Before applying for a business credit card, you will need to check your credit score. Higher credit scores will increase your chances of approval. Usually, businesses with a credit score of 700 or higher will qualify for the best offers. WalletHub lets you check your credit score for free.
They offer practical benefits
While unsecured credit cards may seem tempting, they are not ideal for people with bad credit. These cards are not as flexible as secured ones, and can make overspending more likely. There are business credit card options for those with bad credit. These cards offer valuable rewards and other practical benefits. These cards can be used to help repair your credit, and get the small business loans you need.
The interest rate on a business credit card is usually zero and will help you pay down your debt quicker. You may have to make additional payments if your balance is not paid off. You could be charged a late fee, increase in interest rates and a ding to your credit score if you miss a payment.
They can help to build credit
The best way to build business credit is by opening a business-credit card. These cards are great for making monthly purchases and come with rewards programs. These programs can be very beneficial for certain types and businesses. Although the credit limits may be low when you first start your business, as your credit score increases, you can increase them.
But, remember that if you misuse your card, it can impact your personal credit score. Lenders often run hard credit inquiries when you apply for a business card. Hard inquiries could cause a slight drop in your score.
They can cost a lot of money if you overspend
If you don't use your business credit card responsibly, you could end up paying a lot of money. A majority of business credit cards require excellent to good credit. This is usually 680 or higher FICO score. However, some business card issuers will consider people with a lower credit score. There are other options available, such as secured cards, which require a security deposit equal to the credit limit.
Business credit cards can be useful for business owners as they provide a flexible line for credit and offer convenient payment options for business expenses. Many cards offer perks such as cash back rewards or other incentives. However, these cards should be used only to pay for business expenses. Also, be mindful of how much you spend on these cards as you could end up being personally liable for any debts.