Having a good business credit score is one of the most essential aspects to building a successful business. Keeping on top of your business credit score can improve your chances of getting a business credit card.
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UPDATED: DECEMBER 10, 2021
If you’re a new startup founder or small business owner, building your business credit score from scratch can be a challenge. You’re likely aware that having a good business credit score is the stepping stone for growing and expanding your business, and that banks and other credit lending institutions rely on this score as an indicator of your creditworthiness before deciding whether to extend you a business loan or line of credit.
One of the easiest and fastest ways for a business to build its credit score is by using a business credit card (not a personal credit card!). Using a credit card for everyday business expenses and making timely payments over time will help you build a strong credit history. However, for businesses starting anew or those with poor credit scores after some years in business, it can seem tricky to qualify for business credit cards with its myriad of financial requirements.
Remember that you need to build business credit with a small business credit card. You won't apply for a small business credit card with your personal credit score, as card issuers typically ask for your business's information and require that your business credit card only be used for business expenses. That's also something to keep in mind if you're planning on doling out employee cards: make sure those cardholders don't use the credit card for any personal expenses.
Not to worry — all it takes is finding the right business credit card that is suited to your business needs and current credit score.
A business credit card is a perfect credit builder for businesses that plan to grow in the future. It allows you to start with a smaller limit that you can use and pay off regularly. Over time, this business credit builder strategy will allow you to increase your limit, the number of cardholders in your company and the ways you use the card to pay for expenses.
Ideally, the best business credit cards give its users additional lines of credit, low fees, discounts and rewards. For businesses with an average credit rating that don’t quite qualify for the top of the line credit cards, the Capital One® Spark® Classic for Business is a great option.
The Capital One business credit card is designed with simplicity in mind and is one of the easiest credit cards to get if you have less than stellar poor or fair credit. The biggest drawback of this business credit card is its high yearly annual percentage rate (APR) of 26.99% (variable). Despite this, the card has some pretty cool perks.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
This card offers many incentives that are hard to find under one business credit card. The Brex business card (paid monthly) caters especially to startups, and doesn’t require you to guarantee the debt on the card. For the purposes of this article, we’re going to talk about the card that’s paid monthly.
Instead of approval hinging on your business credit score, its measure of creditworthiness depends on your cash balance, spending habits and investors. It also reports to credit bureaus, making it a potential great fit for new businesses with no credit.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
This is a secured credit card for business owners who are able to afford a larger security deposit. The Wells Fargo Business Secured Credit Card will also help to build your business’s credit over a period of time which can help you qualify for an unsecured credit card in the future. If you are not able to get unsecured business credit, this card could work well for you.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
If rewards and cash back programs are a top priority for you, the Chase® Ink Business Unlimited® will likely be the business credit card of your choice. The best part about this card is its generous $750 sign-up bonus if you spend $7,500 in the first three months after account opening (as of the last update of this article). Since Chase reports your account activity to business credit bureaus, this card sets the perfect base for you to build your business credit history. This card also opens the portal to Chase Ultimate Rewards, which can compound your travel rewards, get you bonus points, give you access to credit card offers, and more.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
This card could be another suitable option for businesses with no credit history that are looking for an appropriate business card to start their businesses. The main selling point of the Blue Business Cash™ Card from American Express is that it allows you to spend higher than your credit limit. The card’s Expanded Buying Power feature adjusts with your use of the card, your payment history, credit record, and other factors.
Though Expanded Buying Power is a nice perk, do keep in mind that high credit usage could lower your credit score. It’s also important to ensure your payment is made on or before it is due in order to build and maintain good credit.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
Divvy is not just a business credit card—it’s an innovative card-plus-software solution to help your small business with expense reporting and budgeting. What that means is that your Divvy card automatically syncs with Divvy’s expense management software. Their software platform is free to use, as they make money off the transaction fees paid by the merchant when you use your Divvy Visa. If your business is made up of a small team or you’re running it solo, this may be a great choice to easily organize your business finance and planning.
On top of a physical Divvy card, each user can access virtual credit cards on their mobile device. The virtual card feature helps you control how much you spend and stay within your budget limits.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
Ramp is another fintech two-in-one solution with its Ramp corporate card and spend management platform. This card is designed to help your business spend less by delivering deep insights into your company spending habits and areas for cost-cutting measures.
Here's all the good stuff about this business credit card.
Here are the not so great things about this credit card.
Overall, there are many great credit card options available in the market for startups and small business owners. The key is to look into multiple aspects of what the card has to offer to see if it can help you maximize rewards and meet your goals. This way you get a credit card tailored to your business needs while building a strong credit score. Once you choose the ideal card for your business, take care of your credit score by keeping your credit utilization down, maintaining good payment habits, and spending within your financial means.
Sign up to take control of your business’s financial health today.
Brought to you by the team from Flowcast, Inc. – founded in 2015, Flowcast, Inc. is a fintech startup from San Francisco that provides AI-based credit models to financial institutions.
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