The business credit card market is competitive and efficient. That means you can get a business credit card with no credit history, but that you likely will face higher fees, qualifying requirements and interest rates. The following information explains what to expect when looking for a business credit card with no credit history and offers avenues on how to get one.

Credit History Defined

Why do you need a credit history to get a business credit card? Lenders face risk in lending money to you because you might not pay it back. The lower the risk, the lower the fees and rates they can offer you. Everyone who borrows from a commercial lender, such as a business credit card issuer, has his or her track record for repayment reported to the three major U.S. credit reporting bureaus: Experian, Equifax and TransUnion.

This credit history allows lenders to quickly evaluate what risk level you represent. Many lenders will not lend to anyone who does not have this track record on file.

Secured Business Credit Cards

A secured business credit card is one for which you have put collateral down to reduce the lender’s risk that you do not pay. For example, you might deposit $1,000 in a bank, and the bank then issues you a secured credit card with a $1,000 credit limit. You will not be able to withdraw from that account so long as you have the secured business credit card.

If you have the cash on hand, this is an effective way to establish your credit history so that you can then apply for an unsecured business credit card. However, you must be certain the business credit card issuer is reporting your credit history to the credit bureaus. Not all do, nor are they required to.

Build Financial Relationships

Although checking and savings accounts do not build your credit history, they can help you build credibility. Establish a business checking and savings account with the bank of your choice. As you demonstrate that you can manage your business finances well, you may be able to apply and qualify for an unsecured business credit card.

Get a Cosigner

A cosigner is someone who signs the business credit card application with you. If your cosigner has a strong credit history, the two of you can qualify together, whereas you might not be able to alone. As with the secured business credit card, make certain that your name is associated with the card and that your account activity is being reported to the credit bureaus.

Guaranteed Approval Cards

Many credit card offers come with guaranteed approval or no credit check required. If such offers extend to business credit cards, you can begin establishing credit that way. However, be aware of two important facts. First, guaranteed and no check cards represent more risk to the lender and will have higher fees, higher rates and stiffer penalties. Second, by applying for too much credit or too many business credit cards, you can actually hurt your credit score. So apply only for cards you really want and believe you can qualify for.

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