Small Business Credit Builder Accounts (That Are Actually Worth it) in 2024

Small Business Credit Builder Accounts (That Are Actually Worth it) in 2024

Small Business Credit Builder Accounts (That Are Actually Worth it) in 2024

What You’ll Gain From Investing in This Article

  • Credit builder accounts can help your business build credit.
  • Learn how easy credit builder accounts can benefit your business.
  • Build business credit even if you have bad personal credit. 

A Brief Primer on Small Business Credit

Just like you have personal credit reports and scores, your business can have its own business credit files and business credit scores.  Strong business credit can open up more opportunities for small business loans and financing, business deals,  better rates on insurance, and access to supplier credit.

You build your business credit profile similarly to the way you build personal credit by getting credit accounts with companies that report your payments to business credit bureaus. pay on time and you can build strong credit.

However, one of the challenges with building business credit is that not all companies that offer business financing report positive payments to business credit bureaus. 

If you own a business, you may wonder why you haven’t heard of business credit, or whether your business has a business credit rating. 

Anyone can check business credit, but companies that do aren’t typically required to tell you when they used your business credit report to make a decision about whether to do business with your company. 

Additionally, there’s no requirement that business credit reporting agencies show business owners their credit reports for free, the way there is with personal credit.

This means that business credit remains something of a mystery to many small business owners.

What Is a Business Credit Builder Account?

Business credit builder accounts can help you build business credit, and they are often available to startups, as well as business owners with poor personal credit.

Any type of account that helps your business build credit can fall under the broad category of business credit builder account. Here are the main types of accounts that help build business credit:

Business Credit Builder Loans

With a business credit builder loan, you make regular payments toward a savings account and those payments are reported to business credit bureaus. You’ll make payments toward a specific savings goal and that will determine the amount of credit that is reported to the credit bureaus.

This can be a great way to build credit and savings at the same time but it’s important to make sure you can commit to the required monthly payments. 

Secured Credit Cards 

Secured credit cards work like typical credit cards, but a security deposit is required to open the account. You will have to make regular monthly payments, and at some point you’ll get your deposit back if you manage the account well. 

Business secured cards are usually easy to get even if you have bad credit. The security deposit protects the lender if you default. However, it does require you to make that deposit and that money is not available to you until you get it back, usually when you close the account. 

Business Charge Cards

A business charge card works much like a credit card, except you must pay your balance in full either daily, weekly, or monthly, depending on the terms of the card.  Unlike a secured credit card, you don’t tie up your money with a security deposit. 

Typically this type of account will require you to link your business bank account and payments for any balances you owe will be deducted from your linked bank account. 

There are charge cards from major issuers that don’t require automatic deductions for balances, but you’ll usually need good credit to qualify for those cards. If you do, you can also often earn rewards. 

Business Tradelines

“Business tradelines” is a term that’s used to describe accounts that are reported to business credit bureaus. 

One of the most common types of trade lines is vendor accounts, also known as net 30 accounts. These are accounts from vendors or suppliers  that give a small business 30 days to pay for items they’ve purchased such as office supplies or equipment. If the supplier reports to business credit, the account is reported as a tradeline. Vendors rarely check personal credit or require personal guarantees. 

Find easy net-30 accounts here

Will a Business Credit Builder Account Actually Help My Business Situation?

Business accounts that report a positive payment history to business credit bureaus provide the fastest way to build a positive business credit history. Without tradelines, it’s virtually impossible to establish good business credit.

That said, it’s not uncommon for business lenders to require a personal credit check. They may reject an application for business financing if the owner has low personal credit scores. That’s why it’s also important to build good personal credit.

However, you can establish business credit even if your personal credit is not strong. and work on both at the same time.

One of the main benefits of building good business credit is that any company that checks your credit will see a positive payment history as an indicator of creditworthiness. Good credit means it’s less risky to do business with your company. 

Unfortunately many small businesses don’t succeed, so having a positive credit history can work in your favor. Of course, other factors like time in business and revenue are important too if you want to qualify for small business lines of credit or bank loans. 

Types of Small Business Scenarios Best Helped

Here are three common scenarios where building business credit using credit builder accounts, secured credit cards, business charge cards, or tradelines can help.

1. Established Business With Poor or No Credit

It’s entirely possible for a well-established business that pays its bills on time to discover it has a low business credit score, simply because it doesn’t have accounts reported to business credit. 

A good business credit score may help the business get better rates on commercial insurance, and land contracts with large companies that check business credit. 

2. Brand New Business With Low Personal Credit Scores

It’s hard for startups to get financing. Two popular sources of financing for brand new businesses are SBA loans and business credit cards. Both typically require a good personal credit. 

Establishing business credit can help provide your business with more financing options and other benefits as it grows. 

3. Business Seeking SBA Loans

Certain types of loans guaranteed by the US Small Business Administration require the lender to check a FICO SBSS score. This score takes into account personal credit of all owners with at least 20% ownership, along with business credit,  to create a blended score. A business is much more likely to have a good FICO SBSS score if the owners have good personal credit and the business has good business credit. 

Best Business Credit Builder Accounts

Here are four excellent options for accounts to help you build business credit.

Credit Strong for Business

With CS for Business, you’ll get a 0% interest rate credit builder loan. You’ll make monthly payments for 25 or 50 months, and pay a one-time upfront fee. 100% of every loan payment builds payment history for the company and the cash reserves of the company.

Austin Capital Bank will report a 25- or 50- month bank issued commercial installment loan as a bank-issued financial tradeline account to major business credit bureaus, including Equifax, Experian, PayNet, and SBFE . 

You can cancel at any time without fee or penalty, but if you keep the account you’ll have the full opportunity to build a positive trade line. 

CreditStrong for Business is a product of Austin Capital Bank, Member FDIC. Loan proceeds are locked in an FDIC-insured savings account to secure the credit builder loan until it is repaid. Loan proceeds are unlocked when the loan is closed or repaid in full. 

Nav Prime Card

The Nav Prime Card* is a ​​charge card, with no credit check or security deposit required. With your Nav Prime Card  transactions are reported as a monthly tradeline, so your everyday transactions can build business credit with regular use. You’ll link your checking account for daily autopay, which helps you avoid carrying high debt. 

Exclusive to Nav Prime users, the Nav Prime Card reports as your second tradeline to help improve your business’s financial health profile to unlock better financing options.

The Nav Prime Card is not available in CA, NV, ND, SD. 

eCredable Business

eCredable Business offers two subscription products: Business Lift and Business Lift+. Both are automatically reported as a tradeline to all major business credit bureaus. 

It also gives you the opportunity have bills your business already pays reported to business credit, such as business utilities (power, water, gas, waste, mobile phone, TV services, internet, landline phone), business rent/lease, virtual office, vendors, suppliers, business insurance, and numerous business services to business credit. 

Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card

You’ll need at least $1000 to open this secured business credit card from Bank of America. However, there is no annual fee, and you can earn rewards: unlimited 1.5% cash back on eligible purchases with no cap. Redeem cash rewards as a credit card statement or as a deposit into your Bank of America checking or savings account. 

There is a foreign transaction fee of 3%. 

Bank of America will automatically review the cardholder’s credit history, and customers who pay on time and meet other qualifications may be able to transition to an unsecured card. Bank of America business credit cards generally report to SBFE.

All information about the Bank of America Business Advantage Unlimited Cash Rewards Mastercard Secured credit card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

Business Edition® Secured Mastercard® Credit Card

You’ll need at least $2200 to open a secured business credit card with First National Bank. It offers credit limits between $2,000 and $100,000, in multiples of $50 but your security deposit must be 110% of your desired credit limit. You will earn interest on your deposit. 

The annual fee is $39.

While it doesn’t offer rewards points or miles, there are some perks such as Mastercard Easy Savings (automatic rebates on certain purchases) and discounts on Quickbooks Online or TurboTax. 

All information about the Business Edition® Secured Mastercard® Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

How Nav Can Help Your Small Business Build Credit

With Nav Prime, get detailed insights on your business through Detailed Credit Reports with tradeline reporting that can grow your business credit and improve your financial health profile. Nav Prime gives you access to financial management tools that improve your business financial health profile so you can access better funding options.

Customers who used Nav’s Detailed Credit Reports with tradeline reporting saw an increased business credit scores up to 50% in the first 3 months.**

*Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A. or Thread Bank, and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. FDIC insurance is available for your funds on deposit, up to $250,000 through Blue Ridge Bank, N.A. or Thread Bank, Members FDIC. See Cardholder Terms for additional details.

**Based on aggregate data tracking Experian® Intelliscore Plus business credit scores after three months of having Nav tradeline reporting. Results will vary. Scores are calculated from many variables; some users may not see improved scores.

Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.

Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *