A business credit card can open up doors of opportunity and help improve your cash flow as a small business. But many small business owners feel lost when it comes to opening their own business credit card. Who can get a business credit card? Do freelancers qualify? What if my credit is bad? 

We want to answer each of your questions and help you navigate the process of getting your own business credit card—one that works for your unique needs. We’ll cover each of the steps in this process and provide a few helpful tips to maximize your benefits when it’s time for a business credit card.

1. Check your credit scores

The first step to getting a new credit card is understanding your credit scores. You might be aware of your own personal credit score, but do you know your business credit score? Or how it differs from a personal consumer credit score? 

When you apply for a business credit card, both your personal and business credit scores will be checked so let’s start here. 

Good credit scores for business

  Credit score range Acceptable minimum for funding Excellent score
Personal 350-850 600 800
D&B PAYDEX 1-100 50 80+
FICO SBSS 0-300 140 180
Experian 1-100 51 76

Personal credit

Your personal credit score is calculated by your on-time payments, amount borrowed, credit-to-debt ratio, and the number and age of your various accounts. It’s a number that indicates how risky or safe it would be for institutions to lend you money or extend credit. Usually you’ll need a score above 600 to obtain a credit card, though there are options for no credit or poor credit to help you rebuild and establish better credit. 

As the business owner your personal credit can impact the ability of your company to obtain agreeable funding, so you need to know up front if your personal credit history is going to be a problem. You can check your credit as often as you’d like without hurting your credit score, and you are entitled to a free credit report every year, so take advantage of that report to resolve any problems or disputes.

Keep in mind that your personal credit score can affect your business, but your business credit can also affect your personal credit. You’ll likely need to sign a personal guarantee when applying for a business credit card, so failure to pay will fall to your personal credit.

Business credit

Just like a personal credit score, your business’ financial health and trustworthiness is measured by a number of factors that are summarized by a number called a business credit score. Having “good credit’ refers to your ability to secure financing at agreeable terms.

Beyond just this number, however, is a credit report that details your financial history and behaviors. Lenders, insurance companies, and other interested parties may consult your credit report to see any outstanding debts, collections, and history of late or on-time payments. Credit reports are generated by business credit bureaus, notably Experian, Equifax, and Dun & Bradstreet. 

Just like a personal credit score, you want the highest possible number. A business credit score of 140/300 is a good and healthy minimum score that will allow you to acquire financing or more favorable terms for a business credit card. 

How to repair and build credit

If your business is brand new, you’ll need to build a credit history. You do this by opening business bank and credit accounts, paying your bills on time, and responsibly using credit in the name of your business. Be sure that your vendors and cards are reporting to business credit bureaus so you’re getting credit for good financial behavior. 

If you or your business features a bad credit score, there’s still hope. You can improve your credit score through investigation, disputes, resolutions, and careful credit use. 

  • Investigate: Check your credit report and be meticulous. Find the items that are damaging your credit and investigate any confusing or incorrect entries. 
  • Dispute: Errors are made by reporting parties, cred card issuers, and credit bureaus. If you see something on your credit report that is incorrect or has already been addressed, you can petition to have the entry removed. The FTC has even created a sample dispute letter to help you file your dispute. 
  • Resolve: Many claims on a credit report are matters of mistake or lack of communication, so resolutions can be reached. For example, you may have been charged for something you didn’t purchase or usage that wasn’t for you (such as utilities after moving out). Or perhaps you didn’t realize you had outstanding balances on infrequently used accounts. Payment in full can help remove these entries from your credit report. 
  • Use responsibly: Your credit will improve incrementally each month you use credit responsibly and pay your bills on time. 

You don’t need to work through all of these steps prior to getting a business credit card—the processes can work concurrently. You just need to be aware of your credit scores and how they might affect your future business credit.

2. Take time to learn about credit cards

There are a few key ways that business credit cards differ from personal credit cards. Specifics will vary from card to card, but here are some of the major distinctions.

Usage

As a small business owner you may use your personal credit card for business purposes, but once you have a business credit card it can ONLY be used for business. Personal expenses will be considered a violation of your credit card agreement.

Regulations 

Personal credit cards are highly regulated, which means there are a wide range of protections for personal consumers. Business credit cards are exempt from these regulations, meaning they can change the interest rate and levy harsher consequences for late payments.

Annual fees

Common fees are annual fees, cash withdrawal fees, overage fees (going over your limit) and late fees. A higher annual fee typically means larger rewards, which might be worth it in the long run. Do the math to see if an annual fee (or lack thereof) is worth it for the way you use your card. 

Limits & rewards

The credit limit is usually much higher for a business since purchase volume is greater. In turn, the reward structures are also more lucrative.

Personal guarantees

Depending on your business and personal credit scores, you may be required to provide a personal guarantee when signing up for a business credit card. A personal guarantee means that you’re on the hook for the unpaid balance if your business fails.

Multiple cards 

Unlike personal credit cards, business credit cards may need to be used by multiple parties. Some cards offer card creation and card issuing to your employees, and the potential to track expenses on individual cards.

Reporting to credit bureaus

It is up to the card issuer to report payment history to a credit bureau. Some credit card networks will report to all business credit bureaus, while some may report to one exclusively. Determine the credit scoring service you’d like to target and then research the business credit cards that work with that credit bureau.

3. Research credit cards that meet your company’s needs

There are so many options for business credit cards out there—it’s easy to get overwhelmed. Rather than jumping in headfirst, you can begin with your business lifestyle and general needs to help you narrow the scope of your research. 

Here are the key benefits to consider for your business credit card:

  • Introductory 0% APR: Low or 0% no-interest introductory rates are great for making lots of up-front purchases that you won’t be able to pay off right away. 
  • Earn rewards: Bonus points when you make an eligible purchase or cash rewards are common credit card rewards. Check for specialized tiers of points or spending, as well as perks like memberships or discounts. 
  • Business size: A business of ten or fewer people might look for a small business card that cuts intro APR or useful tools like analytics when you’re running a spartan crew. A small business around a hundred people might be looking for a small business credit card that provides employee cards to facilitate growth.
  • Foreign transaction fee: Are international transactions free or charged the standard 3% fee?
  • Credit card types: If you have poor credit you may not be able to get a traditional business card. Instead you can get a secured business card (which is “secured” by an upfront deposit) or a charge card which functions like a credit card but features lower limits and must be paid in full every month. 
  • Travel points: Look for cards that give you travel rewards such as miles and points for transportation, restaurants, hotels, rentals, and other travel expenses
  • Welcome bonus: Some cards offer a signup bonus for opening a new account, or a bonus after spending a certain amount within an introductory window (e.g. $1,000 back when you spend $5,000 in the first 3 months).
  • Multiple cards or accounts: Do you need cards for several members of your team? Will they need separate accounts? Are there fees or rewards associated with multiple cards? (Divvy allows you to give everyone a company card—for free.)
  • Virtual cards: An option for setting up virtual cards is best for businesses who make frequent online or subscription purchases.

If one or more of these features is important for your business you can begin your search by targeting business credit cards that offer those features.

4. Apply for a business credit card

Once you’ve decided on the right business credit card for you, you’ll need to fill out an application. Most of these applications are online, but whether you apply online or in person at a financial institution you’ll need the following: 

  • Legal business name
  • Business address
  • Business phone number
  • Employee identification number
  • Annual business revenue
  • Age of business
  • Monthly business expenses
  • Personal income
  • Social Security number or taxpayer identification number
  • Date of birth
  • Statements of dispute if there are issues on your credit report

If you’ve got all your ducks in a row, most business credit card applications are processed in just a few hours. As soon as you’ve been approved, you can start spending for your business!

Credit card FAQs

What’s the difference between a personal card and business credit card?

A business credit card usually features a higher credit limit and more lucrative rewards than a personal credit card. However, personal credit cards are much more heavily regulated with more flexibility and buyer protections. Business

When do you know you need a credit card for your business?

You should get a business credit card as soon as you start making regular dedicated purchases on behalf of your business. We’ve found eight particular indicators that you’d benefit from a business credit card for your growing company, including frequent travel and protecting your personal credit.

How do you choose the right credit card for your business?

We’ve found seven key steps to help you find the right business credit card for your company that will give you better access to capital, online expense management, and rewards you’ll actually use. 

  • Check your credit score
  • Itemize your last three months of purchases
  • Research business credit card basics
  • Consider your business lifestyle
  • Predict and plan usage
  • Do the math on annual fees
  • Take note of the rewards program

What’s the difference between Visa and Mastercard?

Visa and Mastercard are both credit card networks that operate globally and are accepted nearly everywhere. Visa and Mastercard both issue cards through branded relationships with financial institutions and retailers. There are differences in the way they process payments, but most of the difference that will affect consumers come from the card issuer’s offerings, such as cash back, rewards structures, and interest rates.

Do you want a business credit card that can do more than just swipe to spend? Divvy is so much more than a card. See what we mean with a demo of Divvy.

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