Many business owners are willing to overcome whatever reservations that they have about small business credit cards and submit an application for one but they are often fearful that they would not qualify for one. No one likes rejection especially after building your hopes up for getting a source of credit to build your small business. The chances of getting turned down for a business credit card is quite slim if you do your research beforehand and get the things that business credit card providers need before you apply.
There are quite a few misconceptions about business credit cards and these must be cleared up if you are to approach the process of application with the right frame of mind.
You Should Have Good Personal Credit In Order To Qualify
Business credit cards are granted in part based on the personal credit of the owner of the business. When you apply for a business credit card there more than likely will be an inquiry into your personal credit. If you credit is less than satisfactory you might not be approved for the business card.
That said you can also improve your chances of get approved by building a solid credit history for your business. You do this in a number of ways. First start off by establishing a business credit profile and then getting a score by working with lenders who will report your payment profile to the appropriate bureaus.
Here are some quick points for building your credit profile:
- Register your business as a corporation or LLC and get a FIN or EIN from the IRS. This will eliminate the possibilities of having your personal credit information mixed in with your business credit. It will also eliminate personal liability for the debt incurred on your business credit.
- Make sure that the company is registered with the business credit bureaus.
- Ensure that your business meets all the credit market requirements. This will include things like having a business phone line, business license and all other requirements. Something as simple as not having this can affect your ability to get approval for a business credit card.
- Have financial statements and a professional business plan on hand when you are about to apply for business loans.
- Work with companies who will extend credit without personal credit checks or guarantees and make sure that they report the payment history to the business credit bureau.
- Make sure that you pay your bills on time so that your score is not affected in a negative way.
- Try to make monthly payments wherever possible so your credit profile does not become dormant.
You Can Apply For A Business Credit Card Even If You Have No Business
In this case you will be relying solely on your personal credit history to secure the business credit card. This is not always advised but it is the route taken by sole proprietors. If you do this you will need to provide your social security number if you do not have an EIN number. Remember that in this case you will be completely liable for the any charges made to the card.
Some other things that you need to check before submitting your application for review include:
- Comparing offers to ensure that you choose the right card for your business.
- Reviewing the status of your credit and checking to see if there are any negative instances on the report.
- Make sure that you have read and understood the terms and conditions of the program so that you meet them and prevent surprises later on.
- Provide accurate information and double check for any errors before you submit the application.
Once you are satisfied that you have done all you can to ensure that you are approved for the program go ahead and send in your application. If for any reason you are declined you can still use this to your advantage. Contact the credit card provider and find out the reason that you were declined if they did not give you one. This way you can fix any problems before you send in an application to another provider.