How a Bankruptcy Affects a Business Credit Card Application |
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A business credit card application
is used to apply for a credit card that is issued to the business owner
in his or her business' name. Getting a business credit card allows
small business owners to get loans, make payments and build credit
history without putting their personal credit on the line. However,
when they apply for a business credit card, their financial history
very much matters; though there are ways to work around that.
Credit History and Business Credit Card Application
Before the business owners get a business credit card, they
have no business credit history. This means that their application will
be judged solely on the business owner's personal credit history. If he
or she went through a bankruptcy, the credit score will reflect that.
This does not necessarily mean that the application will be declined,
but it does mean that the business owner will probably have to settle
for higher interest rates and other stringent terms. That said, if the
business owner maintained good credit since bankruptcy, the banks may
be inclined to consider the application in a more favorable light. And
once 7 years passed, the bankruptcy will vanish from the business
owner's credit history altogether.
Reducing Credit History Penalties
Business owners who went through bankruptcy can qualify for a
decent business credit card if he or she forms a Limited Liability
Company or a C corporation with at least one person who has a good
credit history. Under this arrangement, the business credit card can be
used by all members of the LLC/C Corp in question, which reduces risk
and makes banks more inclined to accept the application.
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