03 Sep 2018

What Do You Need to Qualify for a Business Credit Card

A business credit card can be an absolutely invaluable asset to a company’s operation. However, attaining a line of credit for your company is very different than applying for a personal credit card. Keep reading to find out what a business needs to qualify for a line of credit, and why your business should consider getting one.


How Does My Business Get a Line of Credit?

As far as your business goes, there are several things necessary in order to get a line of credit in your company’s name. First, credit card companies will look into your company’s credit history. Major credit bureaus keep track of every loan a business takes out and whether or not it was paid on time. These patterns will make up a company’s credit score. Creditors will check to ensure that there are no patterns of checks bouncing or accounts being overdrawn. They will also pay attention to how much money is going into your company’s account every month. Keeping an active but stable account will prove to credit card companies that your business will be able to pay off debt.

Next, credit card companies will typically want to make sure that a business has been established for two or more years, largely due to the high rate of failing startup businesses. Instead of applying for a line of credit right away, you should spend the first few years establishing a credit history for your company and boosting your credit score.

What About My Personal Credit Score?

Here is where your credit comes in. Since the business owners are ultimately personally responsible for any debt their business incurs, they need to be in good standing. Improving your credit score is one of the best things you can do to help your business get a line of credit with a decent interest rate. Start by devising a budget that allows you to pay off your debt every month. After you have paid off your credit cards, continue to use ten to thirty percent of the credit available, and pay it off in full every month. This is an excellent way to build and improve credit, and is a great habit to form.

Why Your Business Needs a Credit Card

Having a credit card in your business’ name has many benefits. First, it will keep your personal and business expenses from getting tangled up, which will keep your credit score from being hurt by business debts. A company credit card will also help to keep track of business costs, which is absolutely essential for the success of any business. A company credit card can also help your company to establish better credit, which means better funding opportunities down the line.

If your business is just starting out, a line of credit in the business’s name is an excellent way to build and improve credit. Before you call up the bank, though, make sure your own credit score is in good shape and take some steps to boost your credit score. Do your research, make sure your company can pay off its debts, and once you’ve been in business long enough to establish a good credit history, consider taking out a credit card in the company’s name.