How to get business credit card with bad personal credit

Can I get a business credit card with bad credit?

Yes, it’s still possible to get a business credit card if you have bad credit, but you may find your options are more limited compared to someone with good credit. This can mean that some card issuers won’t be willing to offer you their cards, while others will, but with a higher interest rate than the advertised representative APR and/or a lower starting credit limit.

Índice Show

Can I get a business credit card with bad credit?
Should I get a business credit card with bad credit?
Will my personal credit score be checked for a business credit card?
Bad credit vs limited credit
How do I apply for a business credit card?
Eligibility requirements
What is a personal guarantee?
How do I get a business credit card if I have bad credit?
What are the alternatives to business credit cards for bad credit?
Is business credit based on personal credit?
Can I get approved for a credit card with a score of 500?
What is the easiest way to get business credit?
Do business credit cards help your personal credit score?

Should I get a business credit card with bad credit?

Business credit cards can be extremely useful tools for business owners looking to better manage their finances.

Used carefully, a credit card is very often the cheapest way to borrow money over short periods – beating factoring by a country mile, for example. Like consumer cards, business credit card typically give you “up to 56 days” interest-free on your purchases, provided you clear your balance in full each month. So if you buy something on the first day of the month, get your statement and bill at the end of the month, then clear your balance on the due date a couple of weeks later, you’ve effectively borrowed money from your card issuer for as much as eight weeks without paying a penny in interest.

Providing a business credit card is used sensibly and repayments are made on time, they can also help your business to turn its credit score around, which could give you access to better deals in the future.

Some potential upsides

Those interest-free periods on purchases give you the flexibility to handle an unpredictable cash flow – incredibly useful if you don’t know exactly when your invoices will be paid.
Credit cards can help you track and manage business and employee expenses – you can see where your staff are spending money and even set individual credit limits.
By making your credit card repayments on time you can improve your business’s credit score, making it easier (and cheaper) to borrow money in the future.
Cash in on cashback (or air miles, or reward points): why not reap the benefits of money you have to spend anyway?
Some business credit cards offer commission-free currency conversion: great if your business involves travel, or if you have to make purchases in other currencies for any reason.

Some potential downsides

If you only repay the minimum amount each month, credit cards can be a very expensive way to borrow. Your interest rate will almost certainly be tailored to you and your company, so if you have bad credit, you’re likely to pay a higher rate than the bank advertises.
If you miss payments or go over your limit, you could damage your credit score further.
With bad credit you’re likely to be able to borrow less than you would through some other routes, such as asset finance, since credit cards are typically not secured by assets or invoices (although you may still have to provide a personal guarantee – see Business credit cards without a personal guarantee for cards that don’t require this.
The open-ended nature of credit cards, compared to loans which have a fixed end point, can create a temptation to spend when you otherwise would not.

“Representative APR” vs personalised APR with bad credit

Card issuers only have to award their advertised “representative APR” to 51% of those who take out the credit card – the other 49% could be offered a different (higher) rate, especially if they have poor credit. Here’s an example of a fairly standard representative APR vs a higher, tailored APR that a bank might offer to a company/individual with a low credit score.

Representative APR and typical credit limit

Credit card limit: £25,000
Outstanding balance: £3,000
Interest rate: 21.9%
Borrowing £3,000 and repaying over 6 months would cost £532 each month and £3,195 overall.

Tailored APR and credit limit

Credit card limit: £10,000
Outstanding balance: £3,000
Interest rate: 34.9%
Borrowing £3,000 and repaying over 6 months would cost £552 each month and £3,313 overall.

However, if you pay your balance off in full each month, you’ll usually pay no interest at all – regardless of your credit rating.

Will my personal credit score be checked for a business credit card?

Potentially, yes. If you’re a sole trader, lenders will look at your personal credit score to determine your creditworthiness before deciding whether to let you borrow.

However, if you’ve set up a limited company, you will have both a business credit score and a personal one.
These are completely separate but work in a similar way. If you’re applying for a business credit card, lenders will use your business credit score to determine whether they are happy to let you borrow – just as your personal credit score would be used if you were applying for consumer credit.

Your business credit score can affect the amount of interest you pay, how much you can borrow and whether you’ll get accepted for credit at all. The higher your score, the more likely you are to get accepted, the more you’ll be able to borrow and the better the rate of interest you’ll be offered.

In some cases, lenders will look at both your business credit score and your personal one to establish your creditworthiness. This will often be the case if your business is new and has yet to build up its own credit rating. Lenders may also want to see your estimated turnover, along with copies of bank statements and business plans before agreeing to let you borrow.

Note that if your company has multiple directors, any one of them could potentially affect your company’s ability to get credit. So it’s worth every director checking that their credit score is up to scratch before applying.

If your company is accepted for a business credit card, making your repayments on time and staying within your credit limit can help your business to boost its credit rating which could give you access to better deals in the future.

Bad credit vs limited credit

Although both can affect your business’s ability to get accepted for credit, there is an important distinction between bad credit and limited credit.

If your business is just starting out and you’ve never borrowed before, your business is unlikely to have much of a credit history. This limited credit can make it difficult for lenders to assess your company’s creditworthiness, which is why they may turn to your personal credit history instead.

In comparison, if your business has bad credit, this means it does have a credit history but that mistakes have been made. Bad credit could be caused by failing to pay bills and invoices on time, missing credit repayments, failing to file business accounts on time or exceeding overdraft or credit card limits.

Bad credit can make it much harder to get accepted for credit again in the future, and it can be worth taking steps to improve your business credit score before making further applications for credit.

How do I apply for a business credit card?

You can shop around for a business credit card in the same way as a personal credit card. To do this, you’ll need to compare factors such as:

Interest rates
Fees
Rewards and benefits
Credit limits
Whether you can have additional cards for employees
Budgeting and accounting features
Basic eligibility criteria

Unfortunately, while many lenders offer eligibility checkers for personal credit cards, they are far less common for business credit cards.

No credit cards offer a 100% guarantee you’ll be accepted, but eligibility checkers show you which credit cards you’re most likely to get accepted for without affecting your credit score. This is because they involve a “soft” search of your credit file. A soft search is different to an application for credit – where lenders will run a full, “hard” search of your credit file.

You can usually apply for business credit cards online, by phone or, in some cases, in branch.

Eligibility requirements

As well as a good credit score, many business credit cards will require a minimum annual turnover and a minimum trading history. You may also need to already have a business bank account with that particular provider.

Some business credit cards will also only be available to those who have no bankruptcies or County Court Judgments. And some card issuers will only offer credit cards to limited companies rather than sole traders.

What is a personal guarantee?

If you’re a small business with very limited trading history or credit history, some credit cards will require you to sign a personal guarantee before you can qualify for the card.

This means that you agree to be personally responsible for any debt you accumulate on your business credit card. Personal guarantees are less than ideal – as a rule of thumb you shouldn’t mix up your personal and business finances. However, in some cases they are a necessary evil.

A personal guarantee won’t usually appear on your credit file and won’t impact your credit score, provided you use the card responsibly.

How do I get a business credit card if I have bad credit?

There are a number of things you can do to improve your chances of getting approved with poor credit:

Don’t apply for many credit cards at the same time. This is only likely to damage your credit score further. Only apply for one credit card that you’re confident you will get accepted for. If you’re refused, give yourself a few months before trying again. Most “hard” credit checks, like the ones that are carried out when you apply for a credit card, stay on your credit report for 12 months.
Work on improving your credit score. Take steps to improve both your personal and your business credit score. This is easier said than done, but there are a few simple things that can help, from paying bills and invoices on time to asking your suppliers to share payment data with the credit reference agencies. You can learn more on your business credit score and on your personal credit score in our comprehensive guides.
Consider a card with a personal guarantee. It can be worth doing this for a short time and then switching to a business credit card that doesn’t require a personal guarantee once your business credit score has improved.
Consider a credit builder credit card. Some business credit cards are designed specifically for those looking to build their credit score. However, credit limits tend to be low and interest rates high, so it’s important to clear your balance in full every month. When used responsibly, a bad credit credit card can help your business to improve its credit score and get accepted for better deals in the future.

What are the alternatives to business credit cards for bad credit?

If you can’t find a credit card that works for your business, you can consider other business finance options. Secured forms of finance (such as invoice finance) are more likely to be available to people with bad credit because the risk is lower for lenders. Have a look at business cash advances too.

If you want the convenience of a business credit card, charge cards are quite common and can be a great solution. They’re similar to credit cards, but you’re not allowed to carry a balance on them – you always have to pay your monthly bill in full. You will still need to pass a credit check to apply for one, however, since you’re still borrowing money for the length of the billing cycle.

If your business has a poor credit history, it’s important to improve it before applying for a business credit card – but you should be mindful of your credit score when you start applying, too. Always check eligibility criteria carefully to prevent rejections that could damage your credit score. And once you’ve been accepted for a card, always make your repayments on time and stay within your credit limit. Using your credit card responsibly will help you maintain your business credit score and improve it over time.

Is business credit based on personal credit?

Business Credit vs. Personal Credit. Business credit is based on your business's financial history and is tied to your business's EIN number. Personal credit, on the other hand, is based on your personal spending history and is tied to your social security number.

Can I get approved for a credit card with a score of 500?

Yes, you can get an unsecured credit card with a 500 credit score. The best unsecured credit card to get with a 500 credit score is the Credit One Visa card because it offers a $300 starting credit limit, the potential for automatic credit line increases, and an annual fee of $75 intro 1st yr, $99 after.

What is the easiest way to get business credit?

One of the easiest ways to build business credit is to apply for net terms with vendors and suppliers. As you buy supplies, inventory, or other materials on credit, those purchases and payments get reported to business credit reporting agencies.

Do business credit cards help your personal credit score?

Some issuers report all business card activity to the bureaus, which means your business credit card could either have a positive or negative impact on your personal credit history and credit score. Other issuers only report business credit card information in case of default.