It can be challenging, but not impossible, to obtain a corporate credit card without any personal credit. Your personal credit history can have a direct impact on the different lines of credit that may be accessible to you as a small business owner or entrepreneur just getting started.
With no credit at all, what then?
If you don’t yet have a credit history, it may take longer for you to be approved for a business credit card, but there are steps you can take to increase your chances.
• Before we get started, it might be useful to understand how creditors and card issuers analyse your personal financial history in relation to whether or not you will be authorized for loans and credit cards.
• In a nutshell, lenders that provide loans and credit cards use a person’s credit history as a yardstick to determine whether they are financially responsible and timely with their debt payments.
Without this history, there is a gap in understanding how safe their investment in you is.
Here are a few pointers to increase your chances to get approval for the credit card.
Business credit card: Enhance your chances
Benefit from someone else’s score:
Utilizing someone else’s good credit score to assist boost your own personal credit history is one approach to increase your chances of being approved for a business credit card.
This entails adding your name as an authorised user to another person’s credit card account. It may be your family members, spouse, sibling, business partner, parents, etc.
Although there is no guarantee, I have personally used this method to assist a few family members and acquaintances who, on average, witnessed a 50-point improvement in their scores after three months.
Your personal score may quickly increase if the principal account holder keeps a strong or excellent score, which increases your chances of getting authorised for a business credit card.
Go for a secured credit card:
Obtaining a secured credit card while you work on establishing your credit history is an additional choice to think about.
Even with the above technique, credit-building takes time, so it’s a good idea to consider your possibilities.
A protected card can be the best option if you want to add a card to your wallet soon.
How to choose a secured credit card?
• Secured credit cards normally demand a security deposit, yet they could be easier to apply for if you don’t have established credit.
•The credit limit on the card is typically equivalent to the security deposit.
• Numerous secured credit cards transmit reports to the three main credit agencies, which may improve your future eligibility for unsecured business cards.
Secured credit card: what to seek?
Finding the greatest business credit card that meets your needs is still vital, even when the range of secured cards can be constrained.
Here are some criteria you should consider while selecting a card.
Affordable deposit:
A minimum deposit of $200 to $300 is required for the majority of secured cards. Even though it can be difficult to come up with the bare minimum, you have more flexibility the more money you can put down as a deposit.
Regularly using too much of your available credit will lower your credit score.
Grace period:
A good credit score is largely dependent on timely payments, however, occasionally late payments are necessary due to unforeseen circumstances.
Look for a secured credit card with a built-in grace period so that if you are late with a payment, interest won’t start to collect for a period of time (often 25 days).
Fees at a lower side:
Use caution when choosing a card with high annual fees, monthly maintenance fees, and other unavoidable charges.
Many good secured credit cards have usage fees of $0 to $40, which is standard. These cards also referred to as “fee harvesters,” can swiftly accrue charges.
Unsecured business credit card: How long to acquire?
It’s thrilling to start a new firm, so you might want to move swiftly to maintain momentum, which is entirely acceptable and admirable, in my opinion. However, the reality is that establishing credit takes time.
Realistically, it could take you a year or longer to qualify for an unsecured business credit card if you’re just starting to build credit. For the time being, a secured credit card might be the best option.
Unsecured business credit card: Initial steps to build credit score?
It’s a great idea to establish a solid credit history as your company expands because it will help you in the long term.
You need first comprehend the five aspects that affect credit in order to get started: Payment history (35%), credit use (30%), credit age (15%), variety of accounts (10%), and credit inquiries (10%) all contribute to the final credit score.
Once your credit is established, keep an eye on your credit report and score. I suggest obtaining a free credit score report from Credit Sesame.
By employing a few innovative techniques that show responsible credit utilization and management as your personal credit history develops, you might be able to raise your score even more quickly.
Applying for a secured credit card could improve your score as well.
Credit card with no credit: Crux!
• Don’t let starting a business without credit deter you. Even though building your credit history may take some time, it doesn’t have to feel like a major obstacle to your success because there are other ways to fund your company.
• Consider applying for a secured credit card to establish credit for your business while concentrating on establishing your personal credit so you can eventually apply for an unsecured business credit card.
