A poor credit history can have an impact on opening a business bank account. Fortunately, there are some banking providers who specialise in business accounts for those with bad credit or don’t conduct credit checks at all.
The answer is yes. If you have a poor credit history then it’s likely you’ll find it more difficult to gain access to some financial services, including a business bank account, but it is possible to open one.
You may have a bad credit score for a number of reasons, including missing payments on any bills you owe, or defaulting on mortgage, loan or credit card repayments. Your score will also be badly hit if you’ve been declared bankrupt or have had a County Court Judgement (CCJ) made against you or your business.
But there are measures you can take to increase your chances of being approved for a business account if you have bad credit, as well as some providers who offer business accounts without conducting a credit check (more on both of these things below).
To give yourself a better chance of being accepted for a business bank account, you can take several steps to improve your credit score:
1. Make sure you’re registered on the electoral roll.
2. Check your credit report to ensure there are no mistakes on it.
3. Pay back any credit you owe on time.
4. Pay off as much as you can on any existing loans and credit cards.
5. Don’t make too many credit applications in one go.
6. Don’t apply for credit again immediately after being rejected.
You’ll need to choose a banking provider to go with and apply to them individually (although don’t make lots of applications at the same time, as multiple rejections will further harm your credit score). Each bank will have its own process (many are online) for opening a business account and will require different documentation, including things such as your personal details, ID verification and the name of your business.
Some providers may also go further, conducting credit checks and asking you additional information about your business and its finances.
It might be worth approaching your current banking provider first (a bank that you have other financial products with, such as a personal current account or credit card). If you’ve used any existing accounts sensibly, your bank will be able to see this and take it into account when looking at your new application.
If you have a bad credit history, another outcome here is that your provider may offer you a basic version of a bank account first, to get you started on rebuilding your credit score. You can then look into moving to a full business account at a later date.
For more information on the range of business accounts that exist in the UK, visit our business banking section.
Yes, it is possible to open a business bank account without a credit check. Examples of providers that offer this are Cashplus and CardOneMoney. The process is usually fairly quick, with approved accounts opened in anywhere from a few minutes to a few hours.
This type of banking provider will still require some contact details from you and will check that your business is registered, but they won’t conduct a credit check.
However, do bear in mind that business accounts which target banking customers with a poor credit history do often come with higher fees than some of the other business accounts on the market.
If you have a poor credit history, it’s likely to be more difficult to get a business account with a traditional high street bank, as they don’t tend to offer business accounts that cater for people with bad credit.
There’s a raft of new digital-only business account providers in the UK now, who don’t conduct credit checks when you apply. So it’s worth looking at those as an alternative to the big banks (although be sure to do your research on any account fees that are involved).
If you’ve been refused a business account, it’s worth re-visiting your preparations to make sure you have all your finances and documentation in order. This includes making sure your business is registered, that you personally are on the electoral roll and that you’ve done all you can to improve your credit score. As mentioned above, if you haven’t already, you could consider approaching your existing bank to open a business account.
There’s also the option of going to a business account provider that doesn’t carry out credit checks at all, but be aware that the fees associated with these accounts are among the least competitive out there.
It is impossible to answer this question for a number of reasons.
First off, different bank account providers will have different limits when it comes to accepting applicants with low business credit scores. Also, these banks have a choice of different credit reference agencies using different algorithms to measure your score.
On top of that, your credit score is only one factor used to determine your eligibility for a business bank account. If your business scores well for other eligibility criteria, a bank may be more willing to overlook a poor credit score.
Many people consider opening a business bank account with bad credit to be a difficult challenge, however it is possible. Here we have summarised the options available:
It is possible to open a business account with bad credit, even though it won’t be as easy a task as if you had a good credit history. There are new financial providers (mainly digital-based), who specialise in offering these type of accounts and try to make the application process as seamless as possible. However, it’s still important to compare the account features and the fees involved, to make sure what you sign up for is the right business banking solution for your business.
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