A secured business credit card is an excellent way for business owners with a bad credit score to access a credit line, without too much hassle. To qualify, you must initially make a down payment, which usually dictates what your actual credit line will be. The down payment is held by the business credit card issuer as collateral and is not applied towards your initial purchase. When you make future purchases, the money you initially put down will be applied towards the balance on your card. The great thing about a secured card is that many business owners find that they are more inclined to make purchases with this type of card, because they do not have to worry about paying interest and that monthly payment. It really all boils down to how well the business owner plans out his or her use of the secured card and the timing of each purchase.
There are basically three major credit bureaus that report consumer credit reports to the major credit reporting firms. Experian, Equifax and TransUnion are the ones that will provide the business owner with their secured business credit card application. They will all work with different lenders, so it will be necessary to contact one or more of them to apply for the card. Once the application has been submitted, the applicant will need to wait a few days while the issuer reviews the application before they determine whether or not they will approve the application. The approval process can be very quick in some cases, but it can also be quite lengthy in other instances. So be sure to give yourself plenty of time.
Once the approval has been received, the business owner will need to qualify for the secured business credit card. In order to qualify, the business owner will need to show that they have at least a good credit history and that they can make all of the payments on time. They will also need to qualify for a higher credit limit. When the card issuer sees that the business is credit worthy, they may consider an unsecured business credit card. However, this will still depend on the financial needs of the business owner.
One of the benefits of the secured business credit card versus an unsecured account is that the business owner will not have to pay any interest fees. This is important because in some cases, the interest rates can be very high. Many people tend to think of the credit bureaus as just gatekeepers, but this is not entirely true. The credit bureaus can actually play a very big role in making sure that an individual has a great credit score.
It is important to keep in mind that the secured business credit card issuer will pull your credit history when you apply for the card. This will help the issuer determine whether or not the applicant is capable of paying back his or her debt. Many of the lenders that offer secured cards require individuals to maintain a good credit history. In fact, it is possible to find issuers who actually pull the credit history directly from the credit bureaus. In some cases, the applicants will have to provide proof of their credit history in order to be approved for the card.
As with any other secured line of credit, some credit card issuers do not allow transfers to another credit line until the applicant has made the full monthly payment on the secured business credit card. This means that if the business owner gets his or her first deposit and decides to transfer that deposit to another line of credit, the transfer may not be possible. Therefore, it will be important to plan ahead and ensure that one’s monthly deposits are made on time. It may also be necessary to provide the credit line issuer with additional documentation, such as invoices, receipts and so forth. Some issuers may also require additional collateral in the form of a deposit that must be returned on the balance of the card.
As with any other type of secured line of credit, it is often required that the owner of the business maintains a savings account with the issuer. In many cases, the savings account will need to be funded at least six weeks prior to the date that the owner can begin using the card. In addition, many issuers will require that the owners of the business have an outstanding checking account in which the deposit can be withdrawn upon demand. In some instances, the savings account and the checkbook will not be required, but the card holder will need to ensure that they are both in good standing with the issuer.
When applying for either a business credit card or a personal credit card, it is important to ensure that the applicant establishes a solid credit history and maintains a savings account as well. In some cases, the credit limit and interest rates on the card will be based upon the credit score and history of the individual. When applying for a personal credit card, it is important to determine the maximum amount of credit that will be available and compare that amount against what a potential business card holder will be charged. In the end, getting a business cash advance from the issuer will prove to be very beneficial for both the business and the individual.