There is no question that accepting credit cards is one of the fastest ways to grow your business. But if you have a low credit score or rough credit history, you may find it challenging to get the appropriate merchant accounts to process credit card payments. This challenge is compounded if you work in a higher-risk industry for payments like travel, adult material, cryptocurrencies, and more.
Instead of throwing in the towel and missing out on business, you could benefit from exploring a bad credit merchant account. With a bad credit merchant account instant approval, you could be taking on new customers in a matter of hours. At the same time, your new merchant account can help you repair your credit rating while helping grow your business.
Here’s what you need to know about repairing your credit score so you can start taking credit card payments:
The modern world is one where fewer people carry cash, and checks are virtually a thing of the past. Studies confirm that most consumers prefer using their credit cards to pay for almost everything. Whether it just makes things easier for them or they are building their credit card rewards account, people are more likely to use plastic on all goods and services.
On top of using a physical credit card, many shoppers are leaning towards using virtual wallets and their mobile devices to make payments. Providing more options to your customers means higher sales. Studies also show that consumers are more likely to spend more when they can simply swipe a card or sign in to an app.
Accepting credit cards and online payments is also a great way to keep customers coming back. These kinds of payments open doors for subscription and recurring payments while making shopping more convenient. Your bad credit merchant account allows you to accept more payments and build a stronger relationship with your customers.
For your business to grow, you want to build and maintain good credit. A good credit score opens doors for better interest rates on business loans and can even result in lower payments for your leases.
Unfortunately, things happen that can negatively impact your credit score. Customers who are late on payments might make you late on payments. A change in the economy or technology could put your business behind. Even though there are unforeseeable and uncontrollable events that can hurt your credit score, there are some things that you can control that will make a positive impact.
Making payments on time is one of the most significant steps you can make to improve your business credit score. By keeping up with your bills and debts, you are showing the kind of fiscal responsibility that will help repair your credit score. Consistently paying late or missing payments not only hurts your credit score but can damage your relationship with vendors and suppliers.
If you do find yourself in a position where you aren’t able to make all of your payments, communicate with your creditors. They may have options to push back due dates, accept partial payments, etc. From there, pay off your largest invoice first. You may be able to limit the damage to your company’s credit by covering the costliest debts first.
When you have a line of credit, whether it be a credit card or an account with a vendor, you want to avoid maxing out that credit amount. Your utilization rate is how much debt you have versus the amount of available credit to you. If you have a credit card with a $5,000 limit and owe $2,500, you have a 50 percent utilization rate.
You want to keep your utilization rate below 30 percent. Simply look at your statement for each line of credit your business has. Divide the amount you owe on that account by the total credit limit. Multiply this number by 100 to get the percent.
Identify any lines of credit with a utilization rate of over 30 percent. These should be the cards you should pay down first. Keeping all of your accounts below 30 percent will make an impact on your overall credit.
3. Keep Accounts Open
It’s easy to think that having too many credit cards is a bad thing. If you’re continually using those cards and not paying them off each month, too many accounts can hurt you. At the same time, you don’t need to go closing off accounts just yet. Part of your credit score looks at the average age of accounts. Constantly opening and closing accounts brings this average down and with it your credit score.
After you pay down an account, consider leaving it open. Of course, if that card has an annual fee, you may not want to keep using it. Check with the card supplier to see if you can downgrade that card to an option with no annual fee. If so, you can often downgrade without actually closing the account.
Keep track of rules or policies surrounding your accounts. Some credit cards will automatically close if they aren’t used every so often. You can simply use that card for a small purchase and then pay it off. Making this small action will keep the account active.
There are a host of reasons why keeping your business and personal finances separate is a good idea. Not only does this help make accounting much easier, but it also keeps the IRS off of your back. The easiest way to keep things apart is to open separate bank accounts and lines of credit for your business than you use for your personal finances.
When you’re repairing your business credit, you don’t want to worry about your personal credit getting in the way. More importantly, you don’t want to find yourself in the middle of an audit because too many things are mixed together.
Repairing your credit takes time. It’s a worthwhile endeavor that will open new doors for you and your business. But at the same time, you may need to start making moves to grow your company today. So instead of waiting until your credit is perfect, apply for an instant approval bad credit merchant account. Your business can start handling online and credit card payments while you take care of improving your score.