Can I get a small business credit card with no credit? Most business owners ask this question. Generally, you cannot get an unsecured credit card for your business without any credit. Most offers require you to have excellent or good credit and do not need a co-signer.
However, this does not mean that you cannot work toward getting an approval. If you do not have any credit, it might take a year or more to get approval. If you have limited capital or revenue, applying for a credit card will only dig you further into debt. However, if you have decent finances already and just want to separate personal and business credit, you should consider applying for a business credit card.
How can you improve your chances of getting a credit card when starting from nothing? Here are some useful tactics:
Sponge off someone else’s credit
Generally, you do not need good business credit to qualify for a credit card, but it can help. However, you need a good personal credit score because most creditors use personal creditworthiness to foretell the financial health of your business. It is possible to increase your credit score if another person adds you as an authorized user.
For instance, if you do not have a credit score but your parents or siblings do, you should consider asking them to add you to their personal credit cards. If the person has good credit and his/her issuer reports authorized activity to a credit bureau, your own credit will improve quickly. Although such an improvement might not be enough to qualify your business for the best deals, it might help business owners with average credit.
If your business partner’s credit score is good, you should ask him to apply for the business credit card and add you as an authorized user. This could boost your personal credit and streamline your expenses.
Get your payments on the books
If you want to build personal credit, your good habits should be recorded by three major credit bureaus. You can start by asking your landlord to use a service like RentTrack, which reports to the credit bureaus every time you pay rent. Next, think about going to a bank or local credit union and taking out a credit-builder or share secured loan.
Whenever you make payments on these loans, the credit bureaus will receive reports, which will improve your credit score. When it comes to business credit, you should work on establishing yours. Start by applying for an EIN (employer identification number) then make sure that your finances share the same business name and information.
Such consistency makes it easier for bureaus to monitor your credit profile. If you work with vendors who report payments, your business creditworthiness might improve.
Get a secured credit card
If you cannot piggyback off someone else’s good credit, you should apply for a secured credit card. Although qualifying for one of these is easier, you need to provide a security deposit that is equal to your card’s limit. You will get the deposit back if your account is upgraded or closed in good standing.
It is possible to qualify for a secured credit card if you have no credit, but if you cannot meet the eligibility requirements, apply for a card with no credit check. Only a few issuers offer secured credit cards that are useful in establishing personal and business credit. Although you need to put down a huge security deposit, secured business credit cards have the same benefits as secured personal credit cards.
Just remember that on-time payments are important when building credit.
