A secured business credit card is a great way for individuals with bad credit scores to get the financial help they need. The good thing about secured business credit cards is the fact that anyone can get approved easily because these cards pose no risk to the card issuer. A certain borrower needs to deposit a specific account of cash into the account, and then that in turn becomes the security. If a person defaults on their credit card payments, the funds are automatically used to pay for the outstanding balance.
On e of the most important key factors when building corporate identity is the capacity to establish and obtain an unsecured line of credit. Unsecured loans offer favorable advantages to many small business owners. They don't need collateral, and credit is solely based on their business credit score.
How a Secured Business Credit Line Works
Secured credit cards work pretty much like a normal credit cards. The only difference is that a cardholder is required to make a cash deposit against a certain credit limit on a bank account. Secured cards usually have a credit limit of 50 to 100 percent of the deposit that has been made.
If you made a deposit of around a thousand dollars, expect your account's credit limit at around $500 to $1,000. Secured credit cards may also impose fees that regular cards don't have. There can be processing fees, annual fees, application fees, etc.
Using Secured Business Credit Cards to Your Advantage
Poor credit ratings are usually due to poor repayment habits that most people tend to have. If by any chance you cannot get credit the usual way, secured credit can help in demonstrating your improving payment behavior. It is hard to prove a new ability to make on-time payments without the use of a new credit line. Before even applying for a secured business credit card, make sure to obtain your credit reports from the 3 main credit bureaus in the country. If you think you are not able to secure those 3, getting one would make no sense at all because these future creditors will not able to view your payment history. The payments you made will not be included in your credit record.
After getting approved, always keep in mind that the purpose of this credit card is helping you rebuild your credit history. Never use the card to get more debts. If you think you can't afford a certain purchase, make sure you don't charge it. Use your secured business credit card in making little purchases that you are able to pay every month. Make your payments a priority, and do it in a timely fashion. Avoid getting late when it comes to payments. Read the card's terms and conditions carefully before even signing an agreement. There are business credit cards which have predatory terms and inconspicuous monthly fees.
There are a lot of credit card companies that allow borrowers to shift to unsecured credit cards after making timely payments in a year or two. If in case they don't convert your account, you can always apply for a secured card with other banks.
- Home & Business Finances
- Using a Secured Business Credit Card to Repair Credit
Want your ad here? Contact us for more information about our advertising opportunities.