Best Way To Get a Business Credit Card
“Best way to get a business credit card”
Consider applying for a business credit card if you run a small business. Your company’s demands can be funded, thanks to your improved purchasing power, which also helps you keep business and personal expenses separate and makes filing your tax returns much simpler. It’s critical to understand the requirements for obtaining a business credit card in order to profit from its financial and practical advantages.
Key Points
•You may finance your company’s demands and keep your business and personal costs separate with the use of a business credit card.
•Most lenders of business credit cards demand a personal guarantee, which implies that in the event that the firm is unable to pay the balance, you are responsible for it.
•Although there are many similarities between business and personal credit cards, most TILA requirements do not apply to business accounts.
•To make sure you acquire a business credit card that matches your needs, carefully compare each option.
•If your credit is less-than-perfect, a secured business credit card can be a smart choice.
Conditions to Apply for a Business Credit Card
The criteria for business income, credit score, and other considerations will vary depending on the lender. However, before approving a loan, a credit card provider will typically look over both your personal and corporate credit reports—especially if your company doesn’t yet have a credit history of its own. The majority of business credit card providers will additionally want a personal guarantee, which makes you personally responsible for any outstanding debt or balance in the event that the firm is unable to make payments.
How Credit Cards Works For Businesses
Personal and business credit cards have a few things in common. If accepted, you’ll have a revolving line of credit that you can utilize to finance any unexpected business expenses. In the same way as you would with your own cards, you must:
•By paying bills on time, you may appropriately manage your company account.
•Pay interest on any debt that you carry over from month to month (barring any promotional periods during which interest is waived).
Note
It’s crucial to have business credit cards that give points and cash-back benefits for travel, shipping fees, and other expenses because you may rack up a lot of debt on them.
The Truth in Lending Act (TILA), which very seldom applies to corporate accounts, is a significant contrast between business and personal credit cards. To make sure that lenders inform customers about the conditions and cost of the credit being offered, the TILA was passed. Fortunately, two significant legal provisions apply to business owners. You cannot receive a card unless you requested one, and in the event that your card is lost or stolen, you won’t be held liable for any fraudulent charges that total more than $50.
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The Best Way To Get a Business Credit Card
The methods of the best way to get a business credit card listed below can help you secure a company credit card even if they may seem difficult.
1. Check Your Credit
The best way to get a business credit card easily is to check your credit. Prior to applying for a loan, it’s important to check your credit report for mistakes. These can include inaccurate information about your identity, account status, balance, or credit limit.
Visit AnnualCreditReport to get a free copy of your credit report from each of the three main U.S. credit bureaus.
If you find an inaccuracy, send a letter disputing the information to the reporting lender and credit bureau. Include any documentation that backs up your allegation. Your complaint must be looked into, and if the error is not corrected, you have the right to file a complaint with the Consumer Financial Protection Bureau.
Note
You can raise your credit score and improve your chances of being granted a business credit card by spotting and correcting errors.
2. Research Options for Cards
The second best way to get a business credit card easily is to research card options. Your next step should be to research and contrast the various available business credit cards because there are many of them on the market. Some of the factors to take into account are as follows:
•Type of Card
•Percentage Rate Annually
•Interest rate for new customers
•Fees for promotional interest rates
•Rewards (points, airline miles, hotel stays, cash back, etc.)
•Eligibility criteria
•Credit reporting (ideally, the card should report to business credit agencies so you can build credit that’s separate from your personal file.)
When choosing which card to apply for, think about your business needs and goals. If you’re trying to save every penny and believe you may have to carry a balance, a card with no annual fee and a low interest rate may be your best bet. But, if you’re always traveling to grow and manage your company, a card that earns airline miles or hotel stays could be right for you.
3. Apply for a Card
Once you’ve identified the right business credit card for your business, it’s time to apply. Each issuer will have its own application form and will require different information to reach a decision. However, you should be prepared to provide several pieces of personal and business information, including your personal annual income, personal credit score, type of business, how long you’ve been in business, annual revenue, federal tax ID, and more.
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Options for Those With Poor or Limited Credit
If your credit history isn’t great (or is non-existent), you may still be able to get a business credit card. For example, a business partner with stellar credit could co-sign on the application to increase your chance of approval. But if that’s not an option, consider these others below.
•Secured Credit Card
A secured credit card is typically easier to qualify for because you have to give the bank a security deposit (hence the name) to open an account. The value of your security deposit becomes your available credit line. Once approved, you can use the card to make purchases.
Timely payments demonstrate financial responsibility and strengthen your credit profile. If you maintain the account responsibly for long enough, the bank may switch you to an unsecured card, which doesn’t need to be backed by your own money.
Note
If you fail to pay the balance owed or default on a secured business credit card, the issuer can take your security deposit.
•Vendor Credit
To improve your credit standing (and cash flow), you could also apply for vendor credit. With this arrangement, you receive goods and services from your vendor now with the understanding that you’ll pay for them within a specified net term. As long as you pay within that time frame, you won’t get charged any interest. That means you essentially get a short-term interest-free loan.
Your vendor probably will review your credit before approving your application. But, you can increase your chances of getting a “yes” by paying your invoices on time (or early) for a lengthy period before applying. Plus, you can start with a very short net term, like 10 or 20 days, to show you can handle the responsibility. Then, next time you apply for a business credit card, your list of vendor credit agreements in good standing may help you get approved.
Frequently Asked Questions (FAQs) On The Best Way To Get a Business Credit Card
•Can you get a business credit card without a personal guarantee?
You may be able to get a business credit card without a personal guarantee, but that’s not the norm. Most credit card issuers will require one. That way, if your business can’t cover the debt for any reason, the lender can go after you personally for payment. However, there are a few business credit card options that don’t require this guarantee.
•What’s the easiest business credit card to qualify for?
The easiest business credit card to qualify for is a secured credit card. A secured credit card is of low risk to the lender because you’re required to back the account with your own money via a security deposit. Plus, if you default, the credit card issuer can take your security deposit as payment.
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8 Best Credit Cards For Businesses And How They Can Work Better For Your Business
8 Best Credit Cards For Businesses And How They Can Work Better For Your Business