For several small-business owners, a business credit card can streamline finances while building business credit. But if you have no business credit, how do you get a business credit card?
Whether you are a freelancer or have your own start-up, you have likely wondered how to obtain a business credit card, particularly if you are beginning your business and do not have any business credit still. Even though there are some differences between business and personal credit cards, the process to apply is the same. Here is what you need to do if you are trying to get a business credit card.
Check your personal credit
The personal credit history depends on when we talk about business credit cards because if your business cannot pay the credit card balance, you are on the hook to make payments from your personal accounts. This means it is the business’s responsibility or the business owner to pay what’s owed on the credit card, if the business does not succeed, Take a look at your credit report and credit scores. You will gain one personal credit report per year from each of the 3 main credit bureaus, Equifax, Experian, TransUnion, at annualcreditreport.com. As with personal credit cards, your options become more available once your credit score is in the better range, with a FICO score of a minimum of 690. If your score isn’t quite where you probably did love it to be, credit-building habits like making all bill payments on time and charging a low percentage of your total overall credit limit monthly can help over time
Research business credit card options to find one that fits your requirements
There are different kinds of business cards, so be sure to keep your business requirements in mind. It is necessary to consider the type of business you have and how you can maximize your rewards based on your business-spending needs. For instance, a freelance graphic designer with every month expenses for design software can consider a business credit card with cashback for general buying.
But a business owner who travels often can consider a business card with travel rewards instead. If you’re performing on building your business credit, know that not all business credit cards report back to business credit-reporting agencies. Before applying, ask your credit card company if it will report to a business credit-reporting agency or not.
Gather the information for applying
Depending on which card you apply for, you may be asked to give some or all of the following info:
Personal info, involving your name, home address, birth date, Social Security number, email, phone number, annual income, and every month rent or mortgage payment.
Business info, involving your business name, phone number, legal structure, industry type, address, annual revenue, employees, years in business, estimated every month spending, and either your employer ID number or your Social Security number.
Apply for a business credit card
Once you found the right business credit card for you, fill the application. Most credit card companies will accept an application online, where you will be provided with a decision. If you do not get an instant decision, the application will be reviewed and a decision will be sent to you.
Wait for the business credit card and use it wisely
If you are approved, all you will do is wait for your card to arrive in the mail. If you applied online, most credit card companies will mail your card within 7-14 business days. Once you get your business card, activate it and use it wisely.
Carefully analyze the terms of any related rewards program so you can reap the maximum benefits of your business card.
do not mix personal and business expenses on the business credit card. Doing so will help you when it is time to find your accounting details during tax season.
If you are a self-employed freelancer or small-business owner, the right business credit card will help you build your business credit if you utilize it responsibly. But if your business does not have an income still or you do not have business credit, be prepared to prove your creditworthiness based on your personal credit history and income. Once you have obtained your card, use it responsibly to grow your business and business credit.