If you are a small business owner, then it is no brainer that a business credit card can be of great convenience especially if you want to build your credit. But, at times we face unavoidable circumstances when the credit score gets a hit. Many people might not even have a credit history at all, to begin with. If you’re caught in such a conundrum, then your best bet would be to go for a secured credit card that requires low or minimum credit scores rather than going for standard or unsecured business credit cards.
Why you need a secured business card to get going?
First thing first. A secured business card can help boost your credit score if used responsibly. Once you have gathered enough credit score, you may then qualify for an unsecured business cred card. But, meanwhile, you can enjoy all the advantages and flexibilities of a prepaid business debit card that doesn’t check your credit score. We have curated six best business credit cards especially for those who are running low with a credit score.
What is a secured and an unsecured credit card?
A credit card, as you know, is either personal or business. Usually, when we talk about a credit card, we mean an “unsecured” credit card because it doesn’t require any physical securities like a cash deposit, to obtain it. However, you do need to sign a guarantee to repay the amount which makes you liable for credit card debt. Since it is assumed that you are financially sound off to pay your credit card bills, every card issuer will check for your credit score – usually 620 or higher – that makes you eligible for an “unsecured” card.
Secured credit cards, on the other hand, are issued against cash deposit as collateral. If you are looking for a credit limit, say, $500, the issuer will ask you to make a security deposit of $500. So, in case you default, the issuer will claim the deposit money to recover the debt. A secured credit card can be used just as their counterparts and it helps to boost your credit score if used responsibly.
Now that you got a hang of the terms, let’s see the different business credit cards for bad credit scores.
1. Discover it® Secured Card
It is not essentially a business credit card for bad credit but is a personal secured card which you may find handy.
We like it because:
1. It is hassle-free
2. Helps to give you a good credit score
3. You can choose your credit line
4. They have a minimum of $200 which is super handy if you are strapped for cash
5. You can review your account every eight months to see if you qualify for an unsecured account. Did we mention that they will refund your security deposit once you qualify for the unsecured account?
Downside: Since it’s a personal card, you can’t get employee cards or other benefits that usually come with an unsecured business card.
2. Capital One® Secured Mastercard®
If you don’t have large cash to make an upfront security deposit, then this is a great option for you. The best thing we liked about them is with a deposit of $49, $99, or $200 (determined based on your creditworthiness) you get a credit limit of $200. And if you can make your monthly payments on time, you can be eligible for a higher credit line just within five months of your car ownership.
Some of the features that we liked:
1. No annual fee and access to the Platinum Mastercard benefits
2. There is no foreign transaction fee
3. You get reports from all three major credit bureau
Downside: This is not a business card, so you need to manage your personal and business finances carefully.
3. Bento for Business Visa® Debit Card
If you are in desperate need of a credit card but have bad or no credit history, then this one is for you. Credit checks are not needed at all to qualify for their credit cards.
What we like the most about them:
1. Friendly features like prefunding employee cards and automatic integration to bookkeeping software
2. Easy to use app dashboard
3. Easy management and monitoring of employee spending/transactions
Downside: Your expenses are deducted directly from your bank account instead of paying a monthly bill which means this card won’t help you to build your credit if that is what you are looking for.
4. Capital One Spark Classic for Business
This is an unsecured business credit card for fair credit. So, if you are a small business owner with average credit and who is unable to qualify for the best cards available in the market – this one is for you.
What we liked most about them:
1. No annual fee
2. You can earn 1 per cent cashback on every purchase, and this is unlimited
3. You can add additional employee cards, no extra charges
4. Boost your personal and business credit scores at one go
Downside: We didn’t find any!
5. Wells Fargo Business Secured Credit Card
A secured card and can be qualified for a credit score as low as 450 for a credit line anywhere between $500 and $25,000, depending on how much you are willing to deposit.
Things that we liked:
1. A high credit line ($25,000) for the growth of your business
2. Opt from either a 1.5% cashback advantage or rewards points program (1 point per $1 spent and a 1,000-point bonus for every billing period that your company spend hits $1,000
Downside: It comes with an annual fee of $25. It also doesn’t have a new customer offer or a 0% intro APR period.
6. BBVA Compass Secured Visa Business Credit Card
This is another secured card where you do not have to bother with your credit limit. Plus, they offer a reward program.
What we liked most about it:
1. No annual fee for the first year
2. Add employee cards at no additional charge
Downside: The credit line will be only 90 per cent of your credit amount. Plus, you need to make an initial deposit of $5000. It is also available only for a few selected states.
Climbing up the credit score ladder
Are you in dire need to improve your credit scores? Whether you have a secured or an unsecured credit card, these tips will help you to improve your credit scores.
1. Ensure you pay all your loan bills in full and on time including your car loans, student loans, small business loans, and whatever debt/loan you have. Remember to keep your account active and open at all times.
2. Debt can improve your credit score as long as you can afford to pay it off on time.
3. What is your credit utilization ratio? A low ratio can help improve your credit score.
Remember, if your credit score is really bad then these bad credit business credit cards can be useful. However, your goal should be always to improve your credit score and switch to an unsecured business credit card. Last but not least, remember credit improve won’t happen overnight. The key is to use your card responsibly and keep patience.