How to get a business credit card

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

As a small business owner, you have a lot on your plate. Keeping your finances balanced is a challenge when weighing professional and personal costs. Even keeping your accounts and payments organized can present issues. So, many business owners decide to separate their finances by learning how to get a business credit card.

Learning how to apply for a business credit card can simplify your finances and help you build business credit. Beyond this convenience, paying off credit card debts helps establish your business and support its long-term success. If you’re just starting and don’t have any business credit yet, you can still get a business credit card. To help you along, we’ll walk you through the required steps and answer a few common questions.

1. Order your personal credit report

You need to build business credit as a newly established company. If you haven’t found your business footing, credit card companies will consider your personal credit history to assess you as a borrower. So, before you apply for a business credit card, review your personal credit report and check your credit score (and remember that your score doesn’t show up on your credit report, so you will need to look elsewhere for it).

While every business credit card approval will have different requirements, most require good to excellent credit for approval:

• A good score: 670 – 739
• A very good score: 740 – 799
• An excellent score: 800 and above

The three nationwide credit bureaus—Equifax^®, Experian^® and TransUnion^®—offer you one free copy of your credit report every year. You can order yours from AnnualCreditReport.com. Take advantage of those free reports and ensure your credit is healthy enough for approval before you apply.

2. Compare business credit card options

There’s no one-size-fits-all approach when choosing a business credit card. Every business credit card has different rates, fees and perks you’ll want to investigate. Your choice will ultimately depend on your situation, financial goals, purchasing needs and industry-specific factors. You can weigh these considerations by asking:

• How do your finances compare to business needs? Is there a large purchase or investment you need to get your business off the ground? Do you have enough funds to cover it?
• What APR (annual percentage rate) can you afford? APR determines the interest you’ll pay within a year, and some business credit cards offer 0 percent introductory APR. This offer can give you some time, usually 12 months, to pay off larger purchases.
• Where do you spend the most in your business? Different credit cards offer different types of rewards, so choosing a card that rewards you for the categories you spend the most in is something to consider.
• Do you travel frequently? A card that rewards you with flight miles and prepaid hotels might be what you want.
• Are everyday purchases your priority for a business credit card? Specifically, ask how much you lean on office supplies and utilities to function. Consider looking into cards offering cashback rewards for those types of purchases.
• Will you attend client dinners often? Some cards offer cashback rewards specifically for restaurant spending.

Remember that every business credit card offers something different. You should tailor your choice according to how your business operates and where you’ll use your card the most.

3. Read the fine print: Understand your personal guarantee

The majority of business credit cards require a personal guarantee when you apply. A personal guarantee holds you responsible for any debt if your business cannot repay it. This guarantee helps credit card companies mitigate risk when extending lines of credit. So, you should check for this requirement before applying.

If your business fails or you can’t keep up with your payments, this liability holds you personally responsible for repayment. Worst case scenario: this puts your personal assets at risk.

4. Apply online

Once you have completed the steps above and have chosen the best business credit card, you can start the application process online. If you’ve ever applied for a personal credit card, the process will feel similar:

1. Gather your personal information beforehand to simplify the process. This includes your contact information and Social Security number.
2. Compile details about your business. This will include the business name and contact information, EIN (employer identification number), number of employees, revenue and processes.
3. Fill out the business credit card applications and submit them online. Take extra time to ensure every detail you include is accurate, and double-check your information before submitting.

7 requirements for a business credit card

You don’t need a large amount of revenue, a team of employees or even a full-time business to qualify for a business credit card. The process is similar to applying for a personal credit card, with a few differences. Here are the application requirements:

• Full legal business name: Business credit cards require your company’s name. This is what will appear on the credit card if you’re approved. Use the business name you initially registered with the state or your legal name if you’re a freelancer.
• Business type: Is your business a corporation, nonprofit or sole proprietorship? You’ll indicate this in your application. If you’re a freelancer, you’ll typically choose a sole proprietorship.
• Beneficial owners: If your business has other owners with more than 25 percent equity, include their information. The lender may want to learn about your biggest investors.
• Industry: You must include the industry your company operates within, chosen from a provided list. Select the one that best describes your business. It’s OK if it’s not an exact match.
• Annual business revenue: Credit card companies want a report of how much your business earns each year. They need to ensure your yearly revenue can cover your card payments. If you’re brand new and don’t have an annual revenue yet, provide your personal income instead.
• Years in business and number of employees: Note how long you’ve run the business and the number of employees you hired in that time. If you haven’t been in business for a year, you can put “zero.” If you’re a team of one and don’t employ anyone else, you can write “one” for yourself.
• Tax identification number: When you register your business with the state, you are issued a nine-digit number. Similar to a Social Security number, this is your EIN. Credit card issuers require it to verify your business. For business owners without an EIN, list your Social Security number instead.
• Legal name, contact information and Social Security number: Credit card companies want your legal name, personal contact information and Social Security number. They help credit card issuers check your personal credit history. Unless you’re already an established business, your personal credit history likely determines whether or not you qualify. To ensure your reliability, they’ll look at your credit score, income and any current or outstanding debts.

Benefits of business credit cards

While anyone can find a use for credit cards, business credit cards offer distinct advantages to cardholders. Business credit cards offer:

• Access to resources: Business credit cards give you access to working capital. Whether you’re in an emergency or need to place a regular order, credit cards give you the resources you need.
• Credit building opportunities: Paying down debts on a business card improves your business credit score. If you need larger loans, paying off small debts shows your trustworthiness.
• Rewards: Some business credit cards give holders rewards for frequent spending. Depending on the plan, you can earn gift cards, cash back or reward miles for travel.
• Higher credit limits: Business cards have higher limits than personal credit cards. As a result, you can spend more in a given time.

What if I have poor personal credit?

Running a small business comes with its fair share of risks. For example, suppose you’ve suffered financial setbacks, and your personal credit has taken a hit. In that case, you might wonder how you’ll qualify for a business credit card.

Instead of a standard unsecured business card, a secured business credit card with low credit score requirements may be your best option. With a secured card, you can deposit cash up front to guarantee payments to lenders. If used responsibly, you can use this card to improve your business credit and switch to a better card option in the future.

Is personal credit tied to business credit?

While lenders use your personal credit score as a qualifying factor in obtaining a business credit card, your credit is separate from your business credit. Your personal credit is tied to your Social Security number and depends on your personal spending history. Business credit, however, is tied to your EIN and reflects your business’s financial history.

Business and personal credit are calculated differently:

• Your personal credit score, created by the three major credit bureaus (Equifax, Experian and Transunion), comes out to a single number. Bureaus often determine this number, your credit score, with the FICO® method.
• With business credit, there’s no standard system used to determine your score. Each business credit reporting service varies in how they establish it. Still, the foundation of a good business credit score will always include things like paying your debts on time.

How to keep your business credit in good shape

Establishing your business and applying for a business credit card are the first steps toward building solid business credit. From there, it just takes time, discipline and following a few basic principles to keep your business credit in good standing. Here are some best practices for business credit management:

• Choose credit card vendors that report payments
• Make your payments early
• Look for errors on your credit reports
• Establish your business as credible

Choose credit card vendors that report payments

Not all credit card companies or lenders report their customers’ credit history to credit bureaus. If this is the case for a supplier you work with, no amount of stellar credit-building will improve your business credit. Confirm that your lender will report your payment history to the credit bureaus to ensure your credit-building efforts don’t go to waste.

Make your payments early

Since your credit score primarily comes down to your payment history, consider the timeline of your payments. Additionally, while paying on time can help you secure better credit, making your payments early will improve your credit even more.

Look for errors on your credit reports

Credit reporting errors aren’t uncommon, but it is common for them to go unnoticed if you don’t periodically check your credit reports. Errors and fraudulent activity can hurt your credit. Unless you make a point to check your account activity, you may find yourself in a difficult position the next time you try to borrow money or get a loan. Avoid this by checking your reports for errors multiple times a year.

Establish your business as credible

Lenders consider more than just your payment history when determining your creditworthiness. You should also work to establish your business’s credibility. You can do this by giving your company a legal name and filing it with your state. Additionally, provide its phone number, mailing address and website in your application. This signals that you’re a legitimate business and puts you in a better position to receive any financing in the future.

Work on your credit with Lexington Law Firm

Business credit cards are essential for many small businesses that rely on loans and grants and want to build their company credit profile. By learning how to get a business credit card and using it responsibly, small business owners can develop their company’s reputation and increase their credit in the long term. If you’re dealing with unfair items or errors on your credit report, Lexington Law Firm provides credit repair services that may be able to help. Our team can help you navigate your credit history and work to make changes before applying for a business credit card.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.