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4 BEST CREDIT CARDS FOR BUILDING BUSINESS CREDIT

Having a business credit card is much more than just an accounting convenience—it’s an essential, credit-building tool for your business. However, building business credit isn’t always easy for entrepreneurs with no credit history or bad credit history.

While your business credit score will eventually be separate from your personal credit score, most credit card companies require you to have decent personal credit before they issue a card.

With this challenge in mind, we researched the best cards to help you build business credit. This list provides details on the differences between secured and unsecured cards as well as which of our “top four” fall into the personal and business card categories.


SECURED VS. UNSECURED CREDIT CARDS

A secured credit card requires cardholders to provide some sort of collateral in order to obtain the card, typically a cash deposit. In general, your credit limit will equal the cash deposit. For example, if your secured credit card requires a $1,000 security deposit, then your credit limit will also be $1,000. This security deposit protects the card issuer in case you default on your payments. These cards typically work best for business owners with low (or no) credit history. If you use a secured credit card properly, your credit score will improve and you’ll eventually be able to move to an unsecured card (and get your deposit back).

Unsecured credit cards are what you usually think of when someone mentions a credit card. They are called unsecured cards because they don’t require collateral, like a cash deposit, in order to open an account. You are, of course, still liable for any charges you make, but the card issuer believes your credit score/history merits issuing a card without requiring a deposit. Because credit card companies typically require applicants for unsecured cards to have a credit score higher than 620, these cards can be hard to obtain if you have poor (or no) credit history.

USING A PERSONAL CREDIT CARD TO BUILD BUSINESS CREDIT

Since there are very few business credit cards available for people with poor credit, business owners might consider using a personal credit card to build their personal credit score and improve their chances of eventually securing a business card.

Based on our findings, here are the four best personal and business credit cards for building business credit:

1. CAPITAL ONE® SPARK® CLASSIC FOR BUSINESS

Ideal for: Business owners with average credit who don’t yet qualify for some of the best business cards on the market.

This unsecured business credit card is ideal for small business owners with a fair credit score. If your credit score isn’t good enough to secure the best unsecured business credit cards, this card is a solid alternative. There’s no annual fee, unlimited 1% cash back on purchases, and no foreign transaction fees.

While this card does have a high interest rate, that won’t be an issue if you pay your balance in full each month.

REWARDS AND BENEFITS (TERMS APPLY)


  • Unlimited 1% cash back on all purchases.
  • Free employee cards.

FEES


  • No annual fee.
  • No balance transfer fee.
  • No foreign transaction fee.
  • 3% or $10 cash advance fee (whichever is greater per transaction).

2. CAPITAL ONE® SECURED MASTERCARD® (PERSONAL CARD)

Ideal for: Business owners with poor (or no) credit history who want to build their credit without a significant up-front investment.  

This personal credit card is a great place to start for business owners who have poor (or no) credit history and lack the cash to make a sizeable security deposit. This card carries all the power of regular MasterCard credit cards (e.g., roadside assistance, travel accident insurance, etc.) with no annual fee. Since this isn’t a business credit card, you’ll have to manually separate your business and personal expenses.

REWARDS AND BENEFITS (TERMS APPLY)


  • Access to a higher credit line as long as you make your first five monthly payments on time.
  • Pick your due date and method of payment (e.g. check, online, or local branch).
  • $0 fraud liability.
  • Free authorized users.

FEES


  • No annual fee.
  • Required security deposit of $49, $99, or $200.
  • No balance transfer fee.
  • No foreign transaction fee.
  • 3% or $10 cash advance fee (whichever is greater per transaction).

3. OPENSKY SECURED VISA (PERSONAL CARD)

Ideal for: Business owners with an extremely low credit score or no credit history who want a small initial investment and don’t plan to travel overseas.

The OpenSky Visa is a simple, secured personal credit card. It carries a $35 annual fee and a $200 minimum security deposit. This card’s biggest advantage is that it doesn’t require a credit check. If you have a severely damaged credit history, this might be the best option for you. However, this card offers no rewards and carries a steep, 3% foreign transaction fee, making it a less desirable choice for business owners that require a lot of overseas travel.

REWARDS AND BENEFITS (TERMS APPLY)


  • No credit check required.

FEES


  • $35 annual fee.
  • Required security deposit of $200 to $3,000.
  • No balance transfer fee.
  • 5% or $6 cash advance fee (whichever is greater per transaction).
  • 3% foreign transaction fee.

4. WELLS FARGO BUSINESS SECURED

Ideal for: Small business owners who want to build their credit, can afford a higher deposit, and would appreciate a card with no foreign transaction fees and a rewards program.  

The Wells Fargo Business Secured credit card is a great option for business owners who need to build their credit and can afford a larger security deposit. Much like other secured credit cards, this card’s limit will depend on your deposit amount. It also offers a rewards program and no foreign transaction fees.

This card does, however, have a $25 annual fee per card up to 10 employees, which can add up quickly. And while there’s no fee to join this card’s rewards program, that could change in the future.

REWARDS AND BENEFITS (TERMS APPLY)


  • Your choice between two reward options:
    • Cash Back Option: Earn 1.5% cash back for every dollar you spend.
  • Zero liability protection.

FEES


  • $25 annual fee per card, up to 10 cards per business account.
  • $500 to $25,000 credit line.
  • No foreign transaction fee.
  • Variable balance transfer fee.
  • Variable cash advance fee.
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Learn more about the Wells Fargo Business Secured Card on their website.

TIPS FOR BUILDING YOUR CREDIT

Once you decide which card best meets your current needs, there are several ways you can start building your business credit regardless of if you use a secured or unsecured card:

  1. Pay all your bills on time (and in full, if possible). Whatever loans and bills you (or your business) may have, it’s in your best interest to always pay on time and in full whenever you can.
  2. Try to use less than 30 percent of your available credit. We call this credit utilization. Credit bureaus associate high utilization with people who often default on their payments. These bureaus reward users (and their credit scores) for low utilization rates.
  3. Check your credit report every year. You can receive a free credit report each year from the major credit bureaus—TransUnion, Equifax, Experian, and Dun & Bradstreet (for business credit). It’s imperative that you check your report every year and report any inaccuracies.

If you obtain one of the four cards on this list and follow these three simple rules for improving your credit, you’ll build your business credit in no time.

 

Editorial disclaimer: The content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. All opinions expressed here are the author's alone.

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