Secured business credit cards are designed especially for business owners with bad credit history or haven’t yet established a business credit. Let’s discuss the basic points about secured credit cards and how it can help you in running your small business.
Basic Details about Secured Business Credit Cards
Compared to issuers of standard credit cards for business, issuers of secured cards are more lenient with their standards. To make up for the risk of having bad credit history or no credit, an entrepreneur must submit cash deposit in his/her account. Usually, the amount of cash deposit submitted will also determine the value of the card holder’s credit limit. Thus, if you need at least $1,000 of credit limit to meet your business’s spending, you must be prepared to have the value submitted in your deposit account.
How It Can Help Your Small Business
Having bad credit history can definitely make it more difficult for a business owner to open new accounts. If you need to obtain a business credit card, you may consider working on raising your credit score first before applying for a card or you may apply for a secured credit card instead.
Secured business credit cards can be used to improve your credit rating. By being consistent with your payments and by regularly using your card, you can slowly but surely rebuild your damaged credit history.
Needless to say, improving bad credit doesn’t happen overnight. You need to consistent with your payments not just for a few months but continuously until you’ve reached your ideal credit score. As soon as you’ve reached good credit rating, you can request your business credit card issuer for an upgrade to an unsecured account. This way, you won’t have to maintain a security deposit in your account to be able to use your card.
Remember that maintaining good credit is a continuous process. Even if you’ve already upgraded your account to an unsecured business credit card, you still need to pay attention to your payments. Keep in mind that late payments can dramatically pull down your credit score in an instant.
What to Expect About A Secured Business Credit Card
Secured credit cards for small businesses are expected to have higher interest rates and fees compared to their non-secured counterparts. Still, it’s not difficult to find a reasonable deal in the market if you do your own research.
Read online reviews so you’ll know the potential credit cards in the market. See to it that your chosen secured business card will report your payments to the business credit trackers as this is the only way you can update your credit report and rebuild bad credit.
|
Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2010 |
I agree, before starting a business, having a good credit is a good start.
@ Veronica’s credit guide
Thank you for your comment.