How to get a business credit card with bad credit

You generally have to pass a card company’s credit check to get a business credit card. But a low credit score doesn’t always result in rejection. Find out more with our short guide on how to get a business credit card with bad credit.

Key takeaways

• You can still get a business credit card with bad credit, but your options may be limited and are likely to come with higher interest rates or lower credit limits

• To improve your chances, consider specialist providers or offering a personal guarantee

• Using your card responsibly by paying on time and keeping balances low can help build your credit score over time

Can you get a business credit card with bad credit?

Yes. There are business credit cards available to individuals and businesses with bad credit. Just don’t expect to qualify for the business credit cards offering the best rates and benefits. 

If you have a business bank account with a bank or building society that also offers business credit cards, you may even be able to avoid undergoing a hard credit check altogether.

This is because your account provider can use the information it has on how you manage your business bank account, together with a soft credit check, to determine your suitability.

In most cases, however, card providers do conduct a hard credit check on both you and your business when you apply for a business credit card.

If you know you have a less-than-perfect credit history, it’s sensible to check your credit file before applying for a business credit card to avoid rejected applications which may cause further damage to your credit rating. You should also ensure you only apply for cards designed for people with lower credit scores. 

What is a soft credit check?

A soft credit check is a less intrusive assessment of creditworthiness compared to a hard credit check, which is visible on your credit file. 

A soft credit check tells you which financial products you’re likely to get, and it's the type of credit check conducted by eligibility checkers. It typically remains visible on your file for 12 months - but crucially only to you.

Because lenders don’t see soft credit checks, they don’t affect your credit score or likelihood of getting a particular credit card or loan. 

How to check your business credit report

Companies, like people, have credit scores based on their financial history, including how much they borrow and how they manage their accounts.

If you’re unsure of your business’s rating, you can check your business credit report in the same way as your personal credit file.

To do this, you need to:

• Contact the three leading credit reporting agencies - Experian, TransUnion and Equifax – and ask for a copy of your business credit report.

• Check your reports carefully to ensure that all the information is up to date, and contact the banks or companies concerned if you spot any errors.

The different agencies measure your score between 0 and 100. A ‘good’ business credit score is therefore above 70, while an ‘excellent’ business credit score is 80 or more - though each specific credit reference agency has their own definition nuances within those bands.

💡 Editor insight: Why it pays to know your business credit score

Alternatives to a business credit card

Business credit cards are a great way to borrow money in the short term. But in most cases, you should clear your business credit card debts in full each month to avoid paying high interest charges.

If you need to borrow money over a longer term, you're often better off with a business loan – unless you can get a business credit card offering 0% on purchases.

Remember that loans for individuals and businesses with bad credit often have higher interest rates. If you or your company have a poor credit score, the amount you can borrow via a business loan may also be smaller.

Depending on how much you need to borrow, another option to consider is a business overdraft. These are available with most business bank accounts. 

Again, your credit limit is usually dependent on your borrowing history. Business overdraft interest rates are often higher than those on personal overdrafts too - but you may get a bigger limit.

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How to improve your business credit score

To improve your business credit score, ensure you:

• Make loan and credit card payments on time – setting up a Direct Debit to clear at least the minimum amount each month can help with this

• Keep debts down – borrowing more pushes up your credit utilisation ratio, which can negatively impact your credit score

• Avoid applying for loans and cards you won’t get – rejected applications leave a hard credit check mark on your credit file

• Check your business credit file – mistakes and outdated information can damage your credit rating

• Consolidate debts – having a single loan or credit card can make it easier to manage your business finances

Read more: How to apply for a business loan if you have poor credit