In the ever-evolving landscape of business finance, having a solid credit score can open doors to a multitude of opportunities. However, for many entrepreneurs and small business owners, maintaining an excellent credit rating can be a challenge, especially during the early stages of their ventures. If you find yourself in the fair credit range, fear not – you still have options when it comes to securing a business credit card that can help you manage expenses, earn rewards, and build your credit profile.
In this comprehensive guide, we’ll explore the top business credit cards available for those with fair credit in 2024. We’ll delve into the key features, benefits, and eligibility requirements of each card, empowering you to make an informed decision that aligns with your business needs and financial goals.
What is Considered Fair Credit?
Before we dive into the best business credit card options, it’s essential to understand what constitutes fair credit. The term “fair credit” typically refers to a credit score range of 580 to 669 on the FICO scale or 601 to 660 on the VantageScore model. This range indicates that an individual has a moderately good credit history but may have had some minor blemishes or a limited credit history.
Factors that contribute to a fair credit score can include late payments, high credit utilization, or a short credit history. While a fair credit score may limit your options compared to those with excellent credit, there are still several business credit cards designed specifically for this credit range.
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The Best Business Credit Cards for Fair Credit in 2024
Capital One Spark Classic for Business
The Capital One Spark Classic for Business is a standout option for business owners with fair credit. This card offers a straightforward rewards program, with unlimited 1% cash back on all purchases. Additionally, it provides the opportunity to earn 5% cash back on hotels and rental cars booked through Capital One Travel.
One of the key advantages of the Capital One Spark Classic for Business is that it doesn’t require an annual fee, making it an excellent choice for cost-conscious entrepreneurs. Furthermore, the card offers free employee cards, allowing you to easily manage and track business expenses.
Eligibility Requirements: Capital One typically considers applicants with fair or limited credit histories for this card. However, it’s important to note that approval is not guaranteed and may depend on additional factors such as your income and existing debt levels.
Bank of America Business Advantage Unlimited Cash Rewards Secured Credit Card
For those with fair credit seeking a secured credit card option, the Bank of America Business Advantage Unlimited Cash Rewards Secured Credit Card is an excellent choice. This card requires a refundable security deposit, which serves as your credit limit, but it offers a competitive 1.5% cash back on all purchases with no annual fee.
One of the most appealing features of this card is the potential to graduate to an unsecured version after demonstrating responsible credit behavior. Bank of America periodically reviews your account and may upgrade you to an unsecured card if you qualify, allowing you to regain access to your security deposit.
Eligibility Requirements: To apply for this card, you’ll need to provide a refundable security deposit, typically ranging from $1,000 to $10,000. Your credit limit will be equal to your deposit amount, subject to credit approval.
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Ramp Corporate Card
The Ramp Corporate Card is a unique offering in the business credit card space, as it doesn’t require a personal credit check or guarantee. Instead, Ramp evaluates your business’s revenue and cash balance to determine your eligibility and credit limit.
This card is designed for incorporated businesses and offers a flat 1.5% cash back on all purchases, with no annual fee or foreign transaction fees. Additionally, Ramp provides powerful expense management tools, custom spending limits, and accounting integrations, making it an attractive choice for businesses seeking greater control over their finances.
Eligibility Requirements: To qualify for the Ramp Corporate Card, your business must be incorporated and have at least $75,000 in a business bank account. Sole proprietors and unincorporated businesses are not eligible for this card.
BILL Divvy Corporate Card
Another corporate card option for business owners with fair credit is the BILL Divvy Corporate Card. This card offers a points-based rewards system, with the potential to earn up to 7x points in various categories, including software, rideshare, and travel.
One of the standout features of the BILL Divvy Corporate Card is its card-level spending controls, which allow you to set limits and restrictions for each employee card. Additionally, BILL conducts a soft credit pull during the application process, protecting your credit score from any potential impact.
Eligibility Requirements: To qualify for the BILL Divvy Corporate Card, your business must be registered with an Employer Identification Number (EIN) and have at least $20,000 in a U.S. business bank account. Sole proprietors are not eligible for this card.
Capital One QuicksilverOne Cash Rewards Credit Card
While not a dedicated business credit card, the Capital One QuicksilverOne Cash Rewards Credit Card can serve as an excellent alternative for sole proprietors with fair credit. This personal credit card offers a competitive 1.5% cash back on all purchases, with the potential to earn 5% cash back on hotels and rental cars booked through Capital One Travel.
One of the advantages of using a personal credit card for business expenses is the ability to build your personal credit score, which can ultimately help you qualify for better business credit cards in the future. However, it’s crucial to use the card exclusively for business purposes to maintain a clear separation between personal and business finances.
Eligibility Requirements: The Capital One QuicksilverOne Cash Rewards Credit Card is designed for individuals with fair or average credit scores. Approval is based on your personal credit history and income.
Why Do You Need a Business Credit Card?
Having a dedicated business credit card offers numerous benefits for entrepreneurs and small business owners. Here are some key reasons why you should consider obtaining a business credit card:
- Separate Personal and Business Expenses: By using a business credit card exclusively for business purchases, you can maintain a clear separation between your personal and business finances. This separation not only simplifies bookkeeping and tax preparation but also helps protect your personal credit score from any potential business-related issues.
- Build Business Credit: Responsible use of a business credit card can help you establish and improve your business credit profile. A strong business credit score can open doors to more favorable financing options, better interest rates, and increased borrowing power in the future.
- Earn Rewards: Many business credit cards offer rewards programs that allow you to earn cash back, points, or miles on your business purchases. These rewards can be redeemed for statement credits, travel, or other valuable perks, effectively reducing your overall business expenses.
- Manage Cash Flow: Business credit cards often provide grace periods or interest-free financing options, allowing you to better manage your cash flow. By utilizing the credit line responsibly, you can maintain liquidity while meeting your business obligations.
- Employee Cards and Expense Tracking: Many business credit cards offer the ability to issue employee cards, enabling you to monitor and control employee spending. Additionally, detailed expense reporting and tracking features can streamline your accounting processes and ensure better financial oversight.
READ ALSO: How to Get a Personal Loan With Bad Credit
How to Qualify for a Business Credit Card with Fair Credit
While having fair credit may limit your options, there are several steps you can take to improve your chances of qualifying for a business credit card:
- Review Your Credit Report: Before applying for any credit card, it’s essential to review your credit report from the major credit bureaus (Experian, Equifax, and TransUnion). This will help you identify any potential errors or discrepancies that could be negatively impacting your credit score.
- Improve Your Credit Utilization Ratio: One of the most significant factors affecting your credit score is your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit. Aim to keep your credit utilization below 30% by paying down existing balances or requesting a credit limit increase.
- Make Payments on Time: Payment history is another crucial factor in determining your credit score. Ensure that you make all your payments, including those for existing loans, credit cards, and bills, on time to avoid negative marks on your credit report.
- Consider a Secured Credit Card: If you’re having difficulty qualifying for an unsecured business credit card, consider applying for a secured credit card. These cards require a refundable security deposit, which becomes your credit limit. By using a secured card responsibly, you can build or rebuild your credit history, potentially qualifying you for better credit products in the future.
- Provide Additional Information: When applying for a business credit card, be prepared to provide additional information about your business, such as revenue, cash flow, and business bank account statements. Many issuers will consider these factors in addition to your credit score when evaluating your application.
Building and Maintaining Good Credit for Future Opportunities
While obtaining a business credit card with fair credit is a positive step, it’s essential to focus on building and maintaining good credit for future opportunities. Here are some tips to help you improve your credit score over time:
- Monitor Your Credit: Regularly monitoring your credit reports from the three major credit bureaus (Experian, Equifax, and TransUnion) can help you identify any potential errors or fraudulent activities that could negatively impact your credit score. You can obtain free annual credit reports from www.annualcreditreport.com.
- Make Payments on Time: Payment history is the most crucial factor in determining your credit score, accounting for up to 35% of your FICO score. Ensure that you make all your payments, including those for your business credit card, on time to maintain a positive payment history.
- Keep Credit Utilization Low: Credit utilization, or the amount of credit you’re using compared to your total available credit, is another significant factor in your credit score calculation. Aim to keep your credit utilization below 30% by paying down existing balances or requesting a credit limit increase.
- Maintain a Mix of Credit Types: Having a diverse mix of credit types, such as revolving credit (credit cards) and installment loans (personal loans, auto loans, etc.), can positively impact your credit score. However, avoid opening too many new accounts at once, as this can temporarily lower your score.
- Monitor Your Credit Limits: As your business grows and your credit score improves, consider requesting credit limit increases on your existing credit cards. Higher credit limits can lower your credit utilization ratio and potentially boost your credit score.
- Leverage Business Credit Reporting: Many business credit card issuers report your payment history and credit utilization to commercial credit bureaus, such as Dun & Bradstreet, Experian Business, and Equifax Business Credit. Responsible use of your business credit card can help you build a strong business credit profile, which can be invaluable when seeking financing or establishing business relationships in the future.
By following these tips and consistently demonstrating responsible credit behavior, you can gradually improve your credit score and unlock access to more favorable financial products and opportunities for your business.
Conclusion
Having fair credit should not be a barrier to accessing the financial tools and resources necessary for your business’s growth and success. By understanding the available options and taking proactive steps to improve your credit profile, you can unlock the best business credit cards for fair credit in 2024 and beyond.
Remember, building and maintaining good credit is an ongoing process that requires diligence and responsible financial behavior. By consistently making on-time payments, keeping your credit utilization low, and monitoring your credit reports, you can gradually improve your credit score and gain access to more favorable financial products and opportunities.
Securing a business credit card with fair credit is not only a testament to your resilience as an entrepreneur but also a stepping stone toward a brighter financial future for your business. Embrace the journey, stay committed to responsible credit management, and watch as new doors of opportunity open for your entrepreneurial endeavors.
Leverage the resources provided in this article, and don’t hesitate to seek guidance from financial professionals or trusted mentors in your industry. With the right strategies and mindset, you can navigate the world of business finance with confidence and achieve your entrepreneurial dreams.
Frequently Asked Questions (FAQs)
Can I get a business credit card with a 600 credit score?
While a credit score of 600 is considered fair, your options for business credit cards may be limited. However, you may still be eligible for secured business credit cards or cards specifically designed for fair credit, such as the Capital One Spark Classic for Business or the Bank of America Business Advantage Unlimited Cash Rewards Secured Credit Card.
What is the minimum credit score required for a business credit card?
Most issuers prefer applicants with good to excellent credit scores, typically 670 or higher on the FICO scale. However, some issuers offer business credit cards for individuals with fair or average credit, generally in the range of 630 to 669.
Can I get a business credit card with no credit history?
If you have no credit history, it can be challenging to obtain a traditional business credit card. In this case, you may want to consider secured credit cards or alternative options like the Ramp Corporate Card, which evaluates your business’s revenue and cash balance instead of your personal credit history.
How can I build business credit from scratch?
Building business credit from scratch can be a gradual process. Start by obtaining a business credit card and using it responsibly by making on-time payments and keeping your credit utilization low. Additionally, you can establish trade lines with vendors or suppliers who report to commercial credit bureaus, and consider incorporating your business to separate your personal and business credit profiles.
Can I get a business credit card if I’m a sole proprietor?
Yes, many business credit card issuers cater to sole proprietors. However, your options may be more limited if you have fair credit. In such cases, you can consider personal credit cards like the Capital One QuicksilverOne Cash Rewards Credit Card for your business expenses, as long as you use them exclusively for business purposes.
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