Business Credit Cards With Bad Credit: What Are Your Options?

Why card issuers care about your credit

Most business cards are approved based on the owner's personal credit, because the card is usually backed by a personal guarantee.

Even for a company with its own tax ID, a new card is often underwritten on the owner's personal score, income and debts. A low score signals higher risk, so issuers decline or set small limits and high interest.

Learn how scores differ in personal vs. business credit scores and how cards work in the ultimate guide to business credit cards.

Options if your credit is damaged

Secured business cards, cards with small limits, and cards from smaller issuers are the usual paths.

• Secured business card. You put down a deposit that becomes your limit. Payments can build credit if the issuer reports.
• Low-limit starter cards. Higher rates and fees but easier approval.
• Store or vendor credit. Net-30 accounts with suppliers can build a record. See what to know about trade credit.
• Authorized-user or personal alternatives. Be careful about mixing personal and business debt.

Costs and traps to watch

Annual fees, high APRs, penalty rates and low limits can make a bad-credit card expensive.

Read the fee table before applying. Carrying balances at a high interest rate quickly outweighs any rewards. Illustrative example: a $5,000 balance at 28% APR costs about $117 a month in interest if left unpaid. Compare to the benefit of the spending.

Also check whether the issuer reports to business bureaus. Without reporting, on-time payments will not build business credit. Read applying for a business credit card with an EIN.

How to improve your odds

Pay down balances, fix errors, avoid new inquiries and show steady business income before you apply.

1. Get your credit reports and dispute errors.
2. Pay down credit card balances to reduce utilization.
3. Pay every bill on time for several months.
4. Open a business bank account and show consistent deposits.
5. Apply for one card at a time, since each application can add a hard inquiry.

More ideas in seven ways to boost your credit score and hard inquiries.

When a card is the wrong tool

Cards suit small, short-term purchases. They are a poor fit for payroll, large equipment or long gaps in cash flow.

High-rate card debt can trap a business in a cycle. If you need several thousand dollars or more for a project with a clear return, compare other structures. A business line of credit vs. a credit card often shows better pricing for larger draws.

Build credit before you apply again

Six months of clean habits can move your profile enough to qualify for better products.

Time and consistency help. Pay every account on time, keep card balances low and avoid applying for new credit while you repair your profile. Dispute errors with the credit bureaus and keep copies of your letters.

Build a business track record too. Open a business bank account, pay vendors on time and ask whether your suppliers report to business credit bureaus. A few small trade accounts paid on schedule can strengthen your file.

Set a target, such as a score range or a utilization level, and recheck your reports every quarter. When your numbers improve, you can compare better cards or other funding with lower cost.

What ROI Funder offers instead

ROI Funder does not place business credit cards. It places working capital, lines of credit, term loans and more, considering 500+ FICO.

If your revenue is steady but your score is bruised, products based on revenue may be worth a look. Requirements: 6+ months in business, $20,000+ monthly revenue and 500+ FICO. We start from payback math and show true cost before you sign. Compare working capital and a business line of credit. The application is online and uses a soft credit pull. We do not place business credit cards, so see the business credit card explainer for guidance.