Just like a personal credit card, a business credit card can be a great way to establish and build your business’s credit history. Some companies require that employees have their business credit cards. Here are six steps for getting one:
Incorporate your business.
To get a business credit card, you’ll need to incorporate your business. There are two ways to do this:
- You can do it yourself by filing the appropriate paperwork with your state’s Secretary of State office (if you’re not sure where that is, check out this handy guide). This can be done online and costs about $100 for most states.
- Or you can hire an attorney who specializes in incorporations–they cost around $300 but may be worth it if you have complicated paperwork or questions that need answering before filing.
Once incorporated, there are several other steps:
- Get a business name and registered address for your company so that banks know where they should send statements and offers (and so they don’t accidentally send them to your home address). If possible, use something memorable since many banks require this information when applying for credit cards on behalf of small businesses; otherwise, just choose something generic like “XYZ Incorporated.”
Establish your business credit score.
Establishing a business credit score is important, especially if you want to apply for a business credit card. A business credit score is based on the same factors as personal credit scores: payment history, the amount owed, length of time with accounts open, and new accounts opened.
You can establish your company’s credit history by using one or more of the following methods:
- Using your card to pay for business expenses (if you’re not sure which expenses count as “business” and which ones don’t–stay tuned!).
- Applying for an independent merchant account that allows you to accept payments online via debit or credit cards on behalf of your company. This will allow customers who visit your website or storefront to pay with their own money–and once again establish both good payment history and length of time with accounts open when it comes time to apply for a business card later on down the road!
Meet the requirements.
- You must be at least 18 years old.
- You must be a legal resident of the United States.
- You must have a valid Social Security number, even if you don’t use it for your finances or tax returns.
- Your business must have an active EIN (employer identification number), which is how the IRS tracks businesses to collect taxes and make sure they’re paying their fair share.
- Your business needs to be in good standing with the IRS before it can apply for credit cards through any bank or card company—this means that there’s no outstanding debt, fines, or liens on record; all employees are properly licensed; no workers’ compensation claims filed against either yourself or your company; etcetera…
Complete an application.
- Complete an application.
- Provide financial information, such as your credit score and income details, on the application form or over the phone with your bank representative. You may also be asked to provide personal information, like your Social Security number and date of birth; if so, this will help them verify that you are who you say you are when they run a background check on you before approving or denying the card request (more on this later).
Accept the card.
- Accept the card.
- Use the card.
- Pay the bill on time.
- Keep your credit utilization low, which means not using more than 30% of your total available credit at any given moment (for example, if a business has $20K in available credit: $6K should be used).
Start using the card to build a credit history.
- Use the card for business expenses and pay off the balance every month. If your business has a credit line of $10,000 and spends $9,500 on its card each month, it will be able to use all of that money without having to worry about exceeding its limit or incurring interest charges. This is important because if you don’t use the card regularly (and therefore build up a positive payment history), then lenders may not extend new lines of credit when they become available in the future.
- If you can’t pay off your balance at once, make arrangements with the issuer beforehand so they don’t default on payments due them–that could hurt their score even more!
By following these steps you can get a business credit card and start building a credit history for your company.
The first step to getting a business credit card is to make sure that you have an account in your name. If it’s not already set up, create one with your bank or financial institution. You can also apply for a new account online or over the phone.
Next, verify that the company has been assigned a business credit score by TransUnion® and Equifax®–this is important because it will determine whether or not you qualify for financing options on purchases made with this type of card.
Once those two things have been taken care of and verified by our lenders, they will assess whether or not they think it would be beneficial for them (and therefore their customers) if they decided to offer financing options through these types of cards; if so then great news! You’re ready to move forward with applying for one today!
We hope this guide has helped get you started on your journey to getting a business credit card. Remember to take the time and do your research so that you can make an informed decision when applying for one. If you have any questions or concerns about any part of the process, feel free to contact us at +1-800-834-8767