How to Get a Business Credit Card With No Credit

A business credit card can be a financial tool for a new or growing enterprise. These cards offer benefits such as streamlining expense tracking, separating business and personal finances, and managing cash flow. Many entrepreneurs, however, face a hurdle: obtaining a business credit card when their company lacks an established credit history. This challenge is particularly prevalent for startups or businesses with limited operational time. Various strategies exist for securing such a card, even without a business credit profile.

Understanding Business Credit and Card Requirements

Business credit represents a company’s financial trustworthiness, distinct from an individual’s personal credit. It reflects the business’s ability to manage its financial obligations and repay debts. This credit profile is tied to the business’s Employer Identification Number (EIN), rather than the owner’s Social Security Number. Business credit scores are generated by agencies, such as Dun & Bradstreet, Experian Business, and Equifax Business. These bureaus gather data from various sources, including lenders, suppliers, public records, and government agencies, to compile a comprehensive credit report for the business.

Unlike personal credit scores, business credit scores use different scales, such as 0-100 or 1-100, depending on the bureau. Dun & Bradstreet’s PAYDEX Score ranges from 1 to 100, reflecting a business’s payment history with vendors. Experian’s Intelliscore Plus uses a scale of 1 to 100, with scores of 80 and above indicating favorable credit. Lenders assessing business credit card applications consider several factors, including the time a business has been operational, its annual revenue, and the industry it operates within. For newer businesses or those without an extensive business credit history, the personal credit score of the owner plays a significant role in the approval process.

“No credit” in this context refers to a newly formed business that has not yet established credit accounts reporting to business credit bureaus. This absence of a reporting history makes it difficult for lenders to assess the business’s creditworthiness independently. Lenders rely on the business owner’s personal credit history to evaluate the risk for the new entity. This reliance underscores the interconnectedness of personal and business finances in the early stages of a company’s development.

Securing a Business Credit Card Without Established Business Credit

Obtaining a business credit card when your company has no established credit history involves leveraging other financial strengths or utilizing specific card types designed for such situations. Relying on the business owner’s personal credit is a common approach, particularly if strong. Many business credit card issuers require a personal guarantee, which means the individual applying for the card agrees to be personally responsible for the business’s debts if the company is unable to pay. This personal guarantee provides reassurance to the lender, mitigating their risk when the business itself lacks a credit profile. When applying for such a card, applicants need to provide their personal Social Security Number, alongside business details like the legal name, address, and federal tax identification number (EIN).

The application process involves online or in-person application at a bank, followed by a hard credit inquiry on the owner’s personal credit report.

For businesses or owners with limited personal credit, secured business credit cards are an option. These cards require a deposit as collateral, which serves as the card’s credit limit. For example, a deposit of $1,000 results in a $1,000 credit limit. This deposit reduces the risk for the card issuer, making these cards easier to obtain for businesses with new or developing credit profiles. While the security deposit is held by the issuer and not used for monthly bills, it is refundable upon account closure or upgrade to an unsecured card, provided the account is in good standing.

To apply for a secured card, a business will need its EIN and proof of business bank account details may be requested, along with the required security deposit, ranging from hundreds to thousands of dollars. Applications can be completed online or at a bank.

Some financial technology (fintech) lenders and specific banks offer business credit cards that are more lenient on credit history, focusing on a business’s cash flow or other non-traditional metrics. These cards are useful for startups that are generating revenue but haven’t had time to build a formal credit history. Some fintech platforms may not require a personal credit check or guarantee, instead evaluating the business based on real-time data (bank balances, sales volume). Applicants for these types of cards might need to link their business bank accounts or provide proof of consistent sales through platforms. The application process for these cards is streamlined and online, with decisions often within 48 hours.

Building a strong relationship with a financial institution through a business checking account can also facilitate access to credit products. Banks prefer to lend to businesses with whom they have an existing banking relationship, as it allows them to assess financial behavior and stability. Maintaining a funded business checking account and demonstrating cash flow can positively influence a bank’s willingness to extend credit. Not a direct application strategy, establishing a solid banking history can pave the way for easier approval of credit cards or lines of credit from that same institution in the future.

Establishing and Improving Your Business Credit Profile

Once an initial business credit product is secured, building and strengthening the business’s independent credit profile becomes the next objective. A fundamental step in this process is obtaining a Data Universal Numbering System (DUNS) number from Dun & Bradstreet. This unique nine-digit identifier is widely used by creditors, vendors, and suppliers to access a company’s credit information and is a precursor to establishing a formal business credit file. Businesses can apply for a DUNS number for free on the Dun & Bradstreet website, providing details such as the legal business name, address, phone number, and industry. While the free application process can take up to 30 business days, expedited options are available for a fee.

Separating personal and business finances is paramount for establishing a distinct business credit identity. This involves maintaining a dedicated business bank account and exclusively using the business credit card for business-related expenses. This clear separation not only simplifies accounting and tax preparation but also ensures that business transactions contribute solely to the business’s credit history, rather than intertwining with personal credit.

Establishing vendor or trade credit is another effective method for building business credit. Many suppliers offer “net-30,” “net-60,” or “net-90” terms, allowing businesses to receive goods or services and pay the invoice within a specified number of days. Crucially, some of these vendors report payment history to business credit bureaus. By opening accounts with such vendors and consistently making on-time payments, a business can demonstrate responsible financial behavior, which is then recorded in its credit file. It is beneficial to confirm with vendors whether they report to major business credit bureaus like Dun & Bradstreet, Experian, or Equifax.

Responsible use of the newly acquired business credit card is fundamental to improving the credit profile. This includes consistently paying bills on time, or even early, as payment history is a significant factor in credit scoring models. Maintaining a low credit utilization ratio is also important, which means keeping the amount of credit used well below the available credit limit. Experts generally recommend keeping credit utilization below 30% of the total available credit to positively impact credit scores.

Regularly monitoring business credit reports and scores is also advisable to ensure accuracy and track progress. This allows for the identification and correction of any errors that could negatively affect the business’s creditworthiness. For those who started with a secured card, consistent responsible use can eventually lead to qualifying for an unsecured business credit card and the return of the initial security deposit.