Top Business Credit Cards For Fair Credit
A business needs a degree of spending flexibility in order to survive and thrive. However, when it comes time to apply for a business credit card to help keep your business running smoothly, you may be disappointed to discover that your ability to get a business credit card is determined not only by the financial history and health of your business, but by your personal credit score as well. (If you don’t know your credit score, here’s an article detailing how you can check your credit score for free)
If you’re running a business while having less-than-stellar personal credit, you may find your credit score to be a hindrance when looking for a business credit card that fits your spending needs; many business credit cards require the applicant to have good-to-excellent personal credit.
Here at Merchant Maverick, we don’t believe that an imperfect credit history should stand in the way of your entrepreneurial dreams. That’s why we’ve gathered together a list of business cards specifically marketed to business owners and entrepreneurs with fair credit. And if you’re looking for more guidance, read our article on how to use business credit cards to your advantage.
Table of Contents
What Is Fair Credit?
The inherent problem with calling certain credit cards good for people with “fair” credit is that terms like “fair” and “good” credit are not standardized, so financial products and review sites have differing definitions of what constitutes “fair” credit. We define fair credit as a credit score between 600 and 669, but other sources may differ somewhat. Note that “fair” credit is often called “average” credit — the terms are used interchangeably.
Why Do Card Issuers Check Your Credit Score?
Because credit card issuers are jerks.
I kid, I kid. The real reason is that your personal credit score is just another data point for business credit card issuers to consider when evaluating the credit risk of a prospective card user. Your business revenue will also be evaluated, but your personal credit comes into play as well. For the card issuers, it’s all about whether or not you’re likely to be able to make your payments on time, and your personal credit score affects that likelihood.
Best Unsecured Business Card For Fair Credit
Nearly every business credit card that’s marketed towards folks with fair credit is a secured credit card, meaning that you pay a security deposit that establishes the amount of your credit line. This way, if you default on your payments, the issuer can just claim your security deposit (and thus takes on less risk). With a secured card, you’re essentially borrowing money from yourself. This may sound absurd, but it is a great way to build up your business and personal credit (assuming the card issuer reports to the business and personal credit bureaus) so long as you make your monthly payments.
However, there’s an exception to this general rule. The Capital One® Spark® Classic for Business is an unsecured business credit card for business owners with fair credit. An unsecured card is a “typical” credit card in that you do not have to make a cash deposit or post any other physical collateral in order to obtain it.
Capital One® Spark® Classic for Business
Spark Classic is an ideal business card for the business owner seeking to build up their business credit. That’s because Capital One will report your card activity to both personal and business credit bureaus (not all cards do this). Just by making your payments on time, you’ll be improving your credit. This is particularly important when your business is just getting off the ground and hasn’t built up much of a credit history.
Credit cards that are available to those with fair/average credit typically aren’t big on bonus offers and rewards — and the Spark Classic is no exception. There’s no bonus offer or introductory 0% APR period, though you will earn an unlimited 1% cash back on all purchases. Not bad for a fair credit business card. The card carries a relatively high APR, but this, too, is to be expected with this sort of business credit card. Cards with lower APRs are typically harder to qualify for.
Best Secured Business Cards For Fair Credit
Now, let’s delve into the secured business credit card scene. (To learn more about secured business credit cards, have a look at our article on the subject, What Is A Secured Business Credit Card?)
Wells Fargo Business Secured Credit Card
There’s a lot to like about the Wells Fargo Business Secured credit card. It’s a secured business card that’s available to business owners with fair or even bad credit. You can establish a credit line of between $500 to $25,000 depending on the amount of your secured deposit. Enroll in the rewards program and you’ll earn 1.5% cash back on every purchase, which is surprising for a “fair credit” credit card, most of which either have no rewards program or give 1% cash back. Additionally, the APR is quite reasonable and is lower than that of most of the business credit cards competing for this segment of the market.
As for the downsides: There’s a $25 annual fee attached to each card you get, so while you can get up to 10 cards for your employees, this could cost you up to $250 a year. Furthermore, to apply for the card, you must first establish a savings and/or checking account with Wells Fargo, and given Wells Fargo’s tainted reputation (deservedly so) owing to recent ethical lapses, you may not be eager to do this. This also means you’ll have to apply in person at a Wells Fargo branch to set up an account (you can’t do this online), and some areas have no Wells Fargo banking locations. For instance, most of New England is, for better or worse, devoid of Wells Fargo branches.
Additionally, while the rewards program currently carries no annual fee, this wasn’t always the case, and that fee could always return at some point in the future.
BBVA Compass Secured Visa® Business Credit Card
The BBVA Compass Secured Visa® Business credit card is another secured credit card option for business owners. Unfortunately, it is currently only available in California, Texas, Florida, Alabama, Arizona, Colorado, and New Mexico. You’ll also have to apply for the card in person at a BBVA Compass branch.
With the BBVA Compass Secured card, you’ll make a secured deposit of at least $500 (no maximum amount is listed). You earn 1% cash back with every purchase, and the APR, while higher than that of the Wells Fargo Business Secured, is still lower than that of many cards in this market space. You can also get additional cards for your employees at no additional cost. This can be quite important when your business is just starting out!
Unfortunately, the card carries a $40 annual fee, though this fee is waived for the first year. There’s also a 3% foreign transaction fee, though many up-market credit cards feature this fee as well.
The BBVA Compass Secured Visa is a very solid secured business credit card, hampered only by its limited availability.
Business Edition Secured Visa Credit Card
The Business Edition Secured Visa® credit card is offered through multiple banks (First National Bank and Cathay Bank are two examples), so the features offered may vary slightly; however, the card carries most of the following features in common regardless of the issuer.
The Business Edition Secured Visa card requires you to make a security deposit of at least $2,000, so if you wanted to make a smaller security deposit, you’ll have to apply for one of the other cards listed here. If, on the other hand, you’re prepared to make a large security deposit, you’re in luck, as you can deposit as much as $100,000. Your credit line will be 110% of your security deposit, meaning you’ll be able to borrow slightly more than the amount you deposited, which is nice.
The card typically carries a variable APR of 19.74%, though this may vary a bit depending on the issuing bank. Sadly, there’s a $39 annual fee that is not waived for the first year.
While there is no cash back to earn through purchases on this card, you will be able to enroll in the Visa Savings Edge program, which can earn you rebates at a number of different retailers, gas stations, and restaurants.
Best Secured Personal Cards For Fair Credit
For most business owners, a secured business card is preferable to a secured personal card. A business card issuer reports to the business credit bureaus, thus helping you build business credit (the free employee cards you can get with some issuers is a helpful bonus as well). However, a secured personal card can help you fund your business as well, often while helping to build your personal credit, which can be important in helping you secure other forms of business funding in the future.
Let’s discuss a few of the best secured personal credit card options out there.
Green Dot primor® Visa® Gold Secured Credit Card
The Green Dot primor® Visa® Gold Secured credit card may have a convoluted name, but it’s a very simple credit card. The card is fairly unique in that there are no credit score requirements to apply for this card. They won’t even perform a credit check.
There are no rewards or cash back to earn, and the only benefits attached to the card are auto rental insurance and zero fraud liability. So what does the Green Dot primor® Visa® Gold Secured provide?
The card’s minimum security deposit is just $200 while the maximum is $5,000, and it features an enticingly low fixed APR of just 9.99% — one of the lowest APRs you’ll find in any credit card. The card also carries a grace period of 25 days until interest on purchases will start to accrue, so paying off your card in full before the payment due date each month will result in you avoiding interest charges.
The card’s primary downside? The $49 annual fee, which is decidedly on the high side for this type of credit card.
OpenSky® Secured Visa® Credit Card
The OpenSky® Secured Visa® Credit Card is another personal credit card you can get without even having your credit score checked. In fact, you don’t even need a bank account to get this card!
The OpenSky Secured Visa requires a security deposit of between $200 and $3,000. The APR is a variable 19.14% — a bit on the high side, though you can do worse with a card of this sort. There’s also a $35 annual fee, and there are no rewards to earn; no cash back to rack up with your purchases. On the plus side, your card activity is reported to all three credit bureaus, helping you build up your credit history.
FAQs About Business Credit Cards For Fair Credit
Can I Get A Business Credit Card With No Credit Check?
Not exactly. While the business cards I’ve listed here are very unlikely to reject anyone for having a low personal credit score (with the exception of the Spark Classic, which requires a personal credit score of at least 550), they will generally perform a credit check. However, some secured personal cards (like the two I mentioned in this article) will approve your application without performing a credit check.
How Can I Improve My Credit Score?
The most important thing you can do is to pay your bills on time — not just your credit card bills, but any other bills you have, as late payments can negatively impact your credit score for seven years.
Another factor to consider is your credit utilization ratio. Your credit utilization ratio is the sum of your total credit card balances divided by your total available credit. Basically, it’s a measure of how much of your total available credit you’re actually using. If lenders see that you’re not maxing out your credit cards, they’ll view you as less of a lending risk. A credit utilization ratio of 30% or less is ideal.
Beyond that, try not to apply for credit willy-nilly. When you apply for a credit card, assuming the issuer performs a credit check, a hard inquiry will be created on your credit report, which will impact your score for two years. With too many hard inquiries, your credit score will suffer.
For more on how to improve your credit score, check out 5 Ways To Improve Your Personal Credit Score.