Why Business Credit Cards Require a Credit Check

Why Business Credit Cards Require a Credit Check

Getting a business credit card is typically easier than getting a small business loan or line of credit. But even business credit cards issuers tend to want to run a credit check when you apply.

For most business owners, getting a business credit card without a credit check is unlikely to happen. But if your business is well established and you have solid financials, there are some options available.

Why business credit cards require a credit check

If you’ve ever applied for a business credit card, you probably noticed that the application asked for a Social Security number, even if you have an employer identification number. This is primarily because most business credit cards require a personal guarantee.

In other words, if your business can’t repay the debt you incur on the card, you’ll be responsible as the guarantor to pay it with your personal assets. As such, even small business credit cards for bad and fair credit require a credit check, because the card issuer needs to know how likely you are to repay the debt if your business can’t.

If your credit isn’t in great shape, you may be limited to a few credit cards, or have your application denied altogether.

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Where to find a business credit card without a credit check

In general, there’s only one type of business credit card that you can get without a personal credit check, and that’s a corporate credit card.

Instead of checking your personal credit and requiring a personal guarantee, corporate card issuers focus on the financials of your business and its creditworthiness.

That said corporate cards are typically designed for larger businesses — card issuers are typically looking for annual revenue of $4 million or more. As a result, they’re not available to many small business owners.  

One corporate card that may not have as high of a bar is the Brex Card. Instead of looking at your credit, it focuses on your cash reserves. Specifically, you typically need to have $100,000 in a corporate bank account and be backed by a venture capital firm when you apply.

You’ll also need to have at least $50,000 in a corporate bank account at all times.

If you meet those requirements, getting the Brex Card could be a better decision than getting a typical business credit card. That’s because if you make it your exclusive corporate card, you’ll earn the following rewards rates on your purchases:

  • 7X points on rideshare and tax purchases
  • 4X points on travel booked through Brex Travel
  • 3X points at restaurants
  • 2X points on recurring software/SaaS
  • 1X points on all other purchases

If you don’t make it your exclusive corporate card, however, you’ll earn just 1 point per dollar on all your purchases.

Either way, you’ll also receive discounts and credits on various services, including Amazon Web Services, Google Ads, WeWork, and more. The card doesn’t charge an annual or foreign transaction fee. That said, there is a fee of $5 per card after your first five cards.

How to boost your credit before you apply for a business credit card

If you’re worried about what a credit check will do to your chances of getting a business credit card, there are some things you can do to get your credit score on the right track.

Check your credit score and report

First things first: it’s important to know where your credit stands regardless of your approval odds. Nav offers free access to your VantageScore 3.0 credit score from Experian, as well as your business credit scores.

Work on problem areas

Your credit report should show you both the good and bad portions of your credit history. If you notice anything on the report that’s erroneous, dispute it with the credit bureaus. If they find in your favor, the negative item will be removed, which can help boost your credit score.

Also, look for other areas that need work. If, for instance, you have a delinquent account or an account in collections, get current on the account or pay it off as quickly as possible.

And if you see any current credit card accounts with high balances, work on paying them down to decrease how much of your available credit you’re using.

Practice good credit behaviors

Many negative items can stay on your credit report for seven years, and some even longer. That said, the credit scoring models typically favor new information over old. So as you’re working on addressing past issues, also focus on establishing good credit habits going forward. Examples include:

  • Pay your bills on time every month.
  • Keep your credit card balances low relative to their credit limits.
  • Avoid applying for credit too frequently.

As you do these things, your score will start to improve over time.

The bottom line

If you’re looking for a small business credit card without a credit check, you’ll be hard-pressed to find one. While corporate credit cards don’t require a personal credit check, they’re designed for larger companies that have a solid financial track record.

Unless you meet their high eligibility requirements, it may be better to focus on improving your credit. This process can take time, and you may need to look for non-traditional financing options in the meantime. But in the long run, it will open up better and cheaper ways to get the capital you need.

Ready to see your credit data and start building better business credit? Check Your Personal and Business Credit For Free (No Credit Card Required).

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