If you have a low credit score, then you might be trying to track down a business credit card with no personal credit check. And although it’s true that some banks do waive the personal credit check requirement, that’s often only the case if you have strong business credit history. That’s a good plan for established small businesses who have longer track records of on-time payments and strong sales and revenue figures. But certainly not for everyone out there looking for a business credit card.
So, if you own a newer business, then you likely haven’t had enough time to build your business credit. And with a limited business credit history and poor personal credit, it may seem impossible to secure a business credit card.
Actually, it is possible to get a business credit card, no personal credit check required (that goes for a business credit history, too). In particular, there are three ways for small business owners to skirt around that business credit card personal credit check requirement. And, in the meantime, we’ll show you some ways to build both your business credit history and your personal credit score. That way, you’ll be positioning yourself to find the best small business financing for your small business in the future.
Business Credit Card, No Personal Credit Check: Your Four Options
When you apply for a business credit card, you can be almost positive that the credit card issuer will perform a personal credit check. That’s because your personal credit score tells the story of your history as a borrower, and the credit card company needs to feel confident that you’re responsible enough to pay back what you owe every time your bill rolls around.
But with so many big and small ways to damage your credit score, it’s understandable that your score might not be high enough to get the business credit card you really want.
Here’s the good news: There are ways to get a business credit card without a personal credit check. Your options are to consider finding a cosigner on a personal credit card, apply for a business credit card that takes average credit, sign up for a secured credit card, or use a prepaid business debit card. We’ll elaborate on each of these below.
1. Find a Cosigner
Most business credit cards don’t allow a cosigner. However, you don’t necessarily need a business credit card to pay for your business’s finances. You can apply for a personal credit card, and use it for your company’s purchases. Keep in mind, though, that we recommend keeping your personal finances and your business’s finances separate whenever possible.
Having a cosigner means you benefit from their good credit, which could potentially qualify you for lower rates or better rewards. On the downside, your cosigner is largely responsible for the debts you incur. So, before you draft your friend or family member to vouch for you, make sure you’re upfront about the risks and responsibilities of being a cosigner.
2. Apply for a Business Credit Card for Average Credit
If you’re not comfortable having someone cosign your credit card, your next option is to find a business credit card that’s okay with less-than-stellar credit.
The Capital One Spark Classic for Business is one of the best options out there for average credit. It has no annual or foreign transaction fees, and it even offers 1% cash back on every purchase. Plus, it requires a minimum credit score of 550, which is among the lowest credit score requirements you’ll find from a major card issuer.
After using this card responsibly to build up your credit score, you can then upgrade to a card with even better rates and rewards. For instance, the Capital One Spark Cash Select for Business offers 1.5% cash back on every single dollar you spend, no annual fee, and a generous sign-up offer.
3. Apply for a Secured Credit Card
If neither a cosigner nor a business credit card for average credit is doable for you, the next step is to consider signing up for a secured credit card. These cards work just like regular (or unsecured) credit cards, but they’re geared especially toward those with bad credit.
Secured credit cards require an upfront cash deposit, which functions as collateral in case you default—which means that card issuers are more willing to extend secured credit cards to people with bad credit since the cardholder (not the credit card issuer) is taking on the financial risk. Your credit limit is generally 90% to 100% of that cash deposit, too.
Secured credit cards are great for building a credit history from scratch. On-time payments and responsible use are reported to credit rating bureaus, which will help you build up your personal credit score. And, eventually, that’ll help you graduate to an unsecured business credit card.
A few of the major card issuers offer secured business credit cards, but we like the Capital One Secured Mastercard. Yes, it’s a personal secured credit card, but it’s a really useful tool for building that all-important personal credit score. And, unlike most secured credit cards, the Capital One Secured Mastercard has no annual or hidden fees.
As an alternative, you can consider the BBVA Compass Secured Visa Business Credit Card. As one of the few secured business credit options out there, it’s one of the best business credit cards for bad credit. This card comes with some perks, too. BBVA waives the $40 annual fee the first year. Plus, you earn 1 BBVA CompassPoint on every $1 spent on qualifying purchases, with bonus rewards on the category of your choice.
4. Use a Prepaid Business Debit Card
Prepaid business debit cards look a lot like secured credit cards: You front-load them with your own capital, and that cash deposit functions as your credit line. But because you’re not paying monthly bills to a credit card company, prepaid business debit cards can’t help you build credit, and they won’t affect your credit score. But that also means you don’t need a credit score at all to qualify for one.
So, prepaid business debit cards, like Bento for Business, are great solutions for small business owners who aren’t yet eligible for business credit cards. The Bento is especially useful if you’re managing several employees since the card makes it easy to create, delegate, and track spending on new cards. Plus, you can use the Bento anywhere that accepts Mastercard.
If you’re still looking for a credit-building solution, use the Bento alongside a secured credit card. That way, you can work on your personal credit score while taking advantage of the Bento’s great features.
Building Your Credit History
While you consider these four options for getting a business credit card with no personal credit check, it’s a good idea to think about building both your business credit history and your personal credit score. That way, you can graduate to a business credit card that doesn’t require a cosigner or a business credit card with better rates and rewards.
With both a strong business credit history and a good personal credit score, you’ll be able to better meet your small business’s financing needs. And when you apply for a business credit card, avoiding a personal credit check won’t be a necessary criterion.
Establish Business Credit
The first step to establishing your business credit? Set up your business entity. The four main ways to legally structure your business are as a sole proprietorship, a partnership, an LLC, or a corporation. These legal structures determine the extent of your personal liability for your business’s financial obligations, as well as the way you file for and pay your taxes.
Once your business is legally established, you should apply for an employer identification number (EIN). This is an IRS designation that is the business equivalent of a consumer’s social security number. To apply for an EIN, your business has to meet a set of very loose criteria, including:
- Your businesses is located in the U.S. or its territories
- You have any number of employees
- Your business is a legally formed partnership or corporation
Your EIN is a useful tool for building your business credit history. By using your EIN on business credit card applications, you’ll establish your reputation with business credit reporting bureaus. You’ll also gain credibility by working with vendors that report to those bureaus, and ensuring that all your businesses’ accounts and finances include the official business name.
Improve Your Personal Credit Score
While it’s possible to secure a business credit card, no personal credit check required, you’ll have a lot more (and better) options if you apply for a business credit card that does pull your personal credit score. That’s because card issuers give the best deals to business owners who have strong evidence of financial reliability—aka good credit scores.
These are a few simple ways to improve your credit score—and to make sure you avoid damaging your credit score in the process, too.
Spend below your credit limit.
Generally, experts say that you should be using less than one-third of your total credit line. Maxing out your credit card indicates to the lender that you might be unable to pay off your bills.
Pay your loan bills on time, every time.
Your payment history is one of the most important factors when the credit bureaus calculate your personal credit score. Most credit card issuers give you the option to sign up for automatic payments each month, so you’ll have no excuse to miss the deadline.
Check your credit report.
You’re legally entitled to one free credit report per year from each of the three major credit bureaus—Experian, Equifax, and TransUnion—but you can request to see your credit report more often than once a year. And when you check your credit report, read it over carefully to ensure that all the information is correct. You can report any misinformation to the credit bureaus, who’ll then adjust your credit score accordingly.
Does a Credit Check Hurt My Personal Credit Score?
Your business credit card’s impact on your personal credit score varies by the bank you use.
Some banks, like Capital One and Discover, report all business credit card usage—both the good and the bad—to the personal credit bureaus. Other banks, like Chase and U.S. Bank, report to the personal credit bureaus only if your account is seriously delinquent. American Express only reports negative information, too. Finally, BBVA, Bank of America, Wells Fargo, and Citibank don’t report your business credit card’s usage to the personal credit bureaus at all.
If you’re worried about your business credit card hurting your personal credit score, you might want to choose a bank that isn’t likely to report usage. On the other hand, if you’re confident that you’ll make on-time payments, and you want to build up your personal credit score, you can choose a bank that always reports to personal credit bureaus.
Getting a Business Credit Card, No Personal Credit Check: The Bottom Line
If your credit score is limited—and so is your business’s financial history—you’ll probably want to apply for a business credit card with no personal credit check. And you can!
There are four ways to skirt the personal credit check issue:
- Ask someone you trust (and who trusts you) to cosign your credit card. There are very few business credit cards, so you’ll likely need to sign up for a personal credit card to cover your business’s expenses. That’s doable, but it makes your financials a lot more complicated.
- Apply for a business credit card with the lowest credit score requirement you can find. The Capital One® Spark® Classic for Business requires a credit score of 550. However, you may have a difficult time qualifying for this card if you’re above but close to the credit score minimum.
- Sign up for a secured credit card. Your credit limit will be determined by the amount of cash collateral you put down.
- Use a prepaid business credit card while you build up your credit. Although the card won’t help you build credit history, it’ll still allow you to issue cards to employees, and integrate with your accounting software, too.
So, you do have options if you don’t want the credit card issuer to check up on your personal credit score. While you responsibly use one of those four options, work on improving both your business and your personal credit history. That way, you’ll be able to get the best business credit cards for your small business in the future.
- IRS.gov. “Do You Need an EIN?“
Anisha Sekar is a personal finance expert who led NerdWallet’s credit and debit card business. She has written for U.S. News and Marketwatch, and featured in Time, NPR’s Marketplace, CNN, and more. She currently writes about everything from getting out of debt, to saving for retirement, to finding affordable health insurance.