Business credit cards for bad credit

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 for a business credit card if you have bad credit:

1. Don’t apply for many credit cards at the same time

This is likely to damage your credit score even more. Only apply for one credit card that you’re confident you can be approved for instead.

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.

2. Check the eligibility criteria

This is the first thing to look at. For example, most business credit cards require a minimum annual turnover, while some are only available to businesses that have been operating for a few years.

3. Use an eligibility checker

Even if your business meets the eligibility criteria, it doesn’t mean that it will automatically qualify for the cards. Lenders usually offer a tool that allows you to enter your business details and see how likely you are to get approved for a card. It isn’t a full application and does a “soft” search that will not show on your credit report.

4. You may be asked for a personal guarantee

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.

You can always switch to a business credit card that doesn’t require one once your business credit score has improved.

5. Expect a low credit limit and a high rate

If you are approved, you probably won’t get the advertised rate. Be prepared for that and, initially, also expect a low credit limit.

Ideally, you want to get your first business credit card asap and gradually build up your credit score and credit limit. This way, when you actually need to spread out the cost of a purchase, you’ll be in the position to apply for a good credit card and get a decent rate.

6. Try to improve your credit score

Both your personal and business ones. This is easier said than done, we know, but there are a few simple things that can help, from making sure you’re on the electoral register to asking your suppliers to share payment data with the credit reference agencies.

You can learn more on your business credit score in this guide and on your personal one in this other guide.

Frequently asked questions

• 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.

• What's the difference between a personal and a business credit card?

  In principle, they are very similar and they work in the same way. However, your business credit card will belong to your business and you’re only supposed to use it for business purposes. Some features may also be different, for example, business credit cards tend to offer higher credit limits.

• How about charge cards?

  Charge cards are 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. They’re quite common and can be a great solution, but you will still need to pass a credit check to apply for one. After all, when you use a charge card, you’re still borrowing money for the length of the billing cycle.