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How to Qualify for a Business Credit Card

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The process of applying for a business credit card is fairly simple. You’ll need to research cards, pick the one you want, gather relevant information about your business, complete an application and await the issuer’s decision. While the actual application is quick and easy, preparing beforehand ensures that you choose the right card for your business and get approved.

Who can apply for a business credit card?

There are several types of business credit cards. Some are reserved for large corporations that have dozens or even hundreds of cardholders, their own expense and reimbursement policies, and complex security needs, while others are geared toward small businesses with five or fewer employees.

With so many business credit cards available, there’s one for just about any type of business. Even sole proprietors who aren’t formally incorporated usually qualify for some business credit cards.

Restrictions on who qualifies usually vary by individual card issuers, but these are some you might encounter:

  • Organization type: Some card issuers will not issue business credit cards to nonprofits or unincorporated businesses, like sole proprietorships.
  • Industry: Some institutions will not extend credit to businesses operating in certain industries, such as multilevel marketers and cannabis- or firearm-related businesses.
  • Applicant qualifications: Every issuer has its own minimum qualifying criteria for card applicants, including income, time in business and credit score.

Unless you’re prohibited from getting a card due to one of these restrictions, getting a business credit card is often just as easy as getting a personal card. Even if you are prohibited from getting a card from one issuer, you may still be able to get a different card from a different issuer. 

What do you need to apply for a business credit card?

When you apply for a business credit card, you’ll need to supply all of the information that you’d customarily provide to apply for a personal card. Basic contact information like your name, mailing address, phone number and email will all be part of the application. You’ll also need to provide several items specific to your business:

  • Business name
  • Business address
  • Years in business
  • Annual revenue
  • Estimated monthly expenses using the card

In addition, you’ll need to provide your tax identification number (TIN). If your business is incorporated, this may be your business’s EIN. If you’re a sole proprietor or a single-member LLC, this may just be your Social Security number. You’ll also need to state your position at the company, as well as Social Security numbers for any other business partners who own over a certain percentage of the business (usually 20% or more).

Depending on the issuer, a card application may also ask what industry the business is in, the nature of business (whether it’s for profit, for example) and the number of employees or additional cardholders.

How to apply for a business credit card

If you think you fit the criteria for a business credit card and would like to get one to support your operations, you can apply anytime. While an application is simple and only takes five to 10 minutes to complete, there are several things you should do first to make sure you get the right card for you.

1. Research your options.

There are dozens of different business credit cards available. Some are great for small startups that need cheap capital, offering long 0% introductory periods. Others are ideal for more established companies with reps who do a lot of traveling, because they accumulate reward miles. Still other cards offer cash-back programs that offer great rewards for spending in certain categories.

Before you settle on a card, you should know your options. Study your business expenses to see what categories you’re spending money in that could qualify you for rewards. Look for available rewards programs and think about what form you’d like your rewards to take (miles, cash, statement credits, or other perks and benefits). Also, be sure to check cards for fees and interest rates.

2. Pick a card.

Once you’ve identified cards that offer the right mix of fees, rates and rewards, you’ll have to decide which one is right for you. Make sure that you read the literature carefully and understand all of the cardholder rights and obligations. If the card offers a 0% introductory period, find out when that period ends. If there are caps on rewards or limits on how rewards can be redeemed, you should be aware of them before you apply.

Also, be sure to check the card’s qualification criteria to make sure that you can qualify for the card you want. [Interested in business credit cards? Check out our best picks.]

3. Check your credit.

If you have been in business for three or more years, you may qualify for a business credit card using your business credit score. More likely, though, you’ll be applying with your own Social Security number, and issuers will check your personal credit score.

In either case, it’s usually a good idea to check these scores on your own before you apply to make sure they’re in good shape. The higher your scores, the better; if your personal credit score isn’t at least 650, you may want to consider holding off on applying altogether. That will give you time to improve your credit score by doing things like paying down debt, bringing accounts current or resolving past credit disputes. [Read related article: How to Apply for a Business Credit Card if You Have Bad Credit]

4. Gather your info.

Once you feel that your credit is in good shape, you’re almost ready to apply. The last thing to do is to gather all of the information you’ll need as part of your application:

  • Your business’s TIN (found on IRS Form W-7 or SS-4)
  • Your Social Security number
  • Social Security numbers for any business partners who own 20% or more of your company
  • Your incorporation documents to confirm the number of years you’ve been in business
  • Recent financials to check your revenue and monthly spend estimates
  • A list of employees who will need cards

5. Apply.

Now that you’ve found the card you want, confirmed that your credit is in fine shape, and gathered all the relevant information that you’ll need to apply, it’s time to actually complete an application. This process is usually completed online and only takes a few minutes.

Depending on the data you enter initially, the card issuer may have additional questions for you or require other information. This may be completed in subsequent steps as part of your online application, or it may require separate follow-up via phone or email.

6. Await the card issuer’s decision.

After you formally submit your card application, the only thing left to do is wait and see if you’re approved. Approval decisions can take a few minutes, or they may take a day or two if additional follow-up is necessary. If approved, you’ll get your card(s) in the mail to activate and start using.

Factors that impact business credit card approval

Though applying for a business credit card only takes a few minutes, credit card issuers gather a good deal of information about both you and your business in that brief application. With all of this information going into an application, it’s easy to see that many items that can make or break your approval:

  • Your business type (some issuers don’t support nonprofits or sole proprietorships)
  • Your revenue or revenue expectations
  • Your time in business
  • Your personal credit score
  • The availability of personal guarantees from you and any partners in your business
  • Your industry

Of course, this list isn’t comprehensive. Credit card applications can be denied for any number of reasons. Just having a weird business address – one that isn’t easily found in a postal code lookup – can be a disqualifying factor.

The most common disqualifying factor, however, is your credit score. Most small business owners who apply for business credit cards apply using their personal credit, not their business credit. Because of this, if a business owner’s credit report isn’t in good shape – with a score of at least 640 to 700, depending on the card they’re applying for – they may be denied.

What’s more, the relationship between a small business credit card and the owner’s credit card is a two-way street. The business owner’s personal credit score may cause the business’s card application to be denied, and any misuse of the company card may come back on the company owner’s personal credit.

Impacts on personal credit

When you apply for a business credit card – especially if it’s a small business card – your application will likely hinge on your personal credit. This means that when you apply, the card issuer will run a hard check on your credit. This hard inquiry will count against your credit and take several months to drop off your credit report.

Additionally, if you’re approved, sometimes (depending on the issuer and card) any balances you carry on your business credit may also appear on your personal credit report – the same way balances on your personal credit cards do. This will further impact your credit if you apply for other business financing or even a personal loan.

Last but not least, applying for a business credit card usually requires a personal guarantee from anyone who owns 20% or more of the business, and sometimes from each cardholder. If your business fails to make on-time payments or defaults on a balance, those items will hurt your personal credit score.

When not to apply for a business credit card

Getting a business credit card can be a quick and easy way to access credit for your business, but sometimes it’s not your best option, like in these situations:

  • Your personal credit isn’t in good shape.
  • You already have a lot of business debt outstanding.
  • Your business is just getting started and doesn’t yet have reliable income.

In these cases, you may not want to apply for a business credit card, because you’re less likely to qualify.

Just as often, though, a business credit card simply may not be the ideal type of financing for your business. If you need financing for a long-term project, for example, you may be able to secure better financing with a long-term, fixed-rate loan. If you have seasonal financing needs that last four to six months, you may be better off with a term loan or a line of credit. [Read related article: How to Apply (and Get Approved) for a Business Loan]

Bottom line

The process of applying for a business credit card is relatively quick and easy – it’s usually as simple as completing an application online. Before you do that, though, make sure that a business credit card is the right financing option for your business. Then, you need to research cards, pick the best one for you, gather your relevant info and confirm that you’ll likely qualify based on your credit score before you submit an application.

That way, you can ensure not only that you’ll be approved – and thus not waste a hard inquiry on your credit – but also that you’ll find the best card for your business.

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Beware of Spot Deliveries! | Auto Credit Express

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A spot delivery is often considered a scam technique that some dealers use to get you to take delivery of a car immediately after you agree to a deal. However, just because you agreed to a deal verbally and put some cash down doesn’t mean that things can’t change or that the vehicle is yours to keep.

Spotting Spot Delivery Scams

Beware of Spot Deliveries!Spot deliveries, also called yo-yo financing, simply means that you drive off with the car before the financing process is done. This is problematic because you can sometimes drive home with a vehicle, only to get a call later that your auto loan application was rejected.

Once you get that call that your financing didn’t go through, one of two things tend to happen next:

  1. You have to draw up a new contract with the lender, typically with different terms than you originally agreed to.
  2. If you don’t want the new terms or can’t afford the payments, you’re forced to return the car.

This can be an emotional rollercoaster, and it’s extremely inconvenient. You get to drive off with your next vehicle, elated that you were tentatively approved, only to find out that you must return to the dealership to start the process over again.

Often, bad credit borrowers can be victims of a spot delivery scam. Once they hear they can take the car home, it feels like a done deal and that everything is sorted. When you’re struggling to get an auto loan approval, some borrowers take what they can get if they need a vehicle quickly.

This is the yo-yo part – going back and forth between an approval and a denial, and from home back to the dealer until something can be finalized.

Avoiding a spot delivery scam is simple: just don’t drive off with the car until all of the necessary paperwork is completed and finalized. This means verifying that you’ve signed the title, the financing documents, and the sales contract. Don’t put any money down on a vehicle until your financing is approved, and don’t drive away from the dealership with any documents left unsigned.

Additionally, bad credit borrowers can explore other financing options if they’re struggling to get an auto loan approval.

Trouble Getting an Auto Loan?

If you’ve had issues finding a lender that can work with your credit, consider special financing. Special financing dealers are signed up with subprime auto lenders that are equipped to handle all sorts of unique credit situations like a past repo, bankruptcy, or poor credit. Instead of basing their loan decision on credit score alone, they examine the many parts of your financial health to determine your ability to take on a car loan.

After you submit your items to a special finance dealership, they’re sent off to one or more subprime lenders that see if you’re ready for an auto loan. Based on your income and overall stability, subprime lenders tailor a car loan (if you qualify) to your situation.

This means approving you for a monthly payment that fits your budget, also called a payment call. Subprime lenders see if you qualify before you pick a vehicle – not afterward. The financing process is done before you take a car home, unlike a spot delivery.

Subprime lenders also report their auto loans to the credit reporting agencies, giving you the chance for credit repair. With an improved credit score, you can have more options for new credit, and hopefully qualify for a better interest rate and possibly a higher loan amount on future car deals. Getting out of bad credit should be a priority, since it can determine so much of your vehicle buying power.

Finding the Right Car Loan

Instead of hoping to run into a dealer that has bad credit lending resources, start with us at Auto Credit Express. We know where special financing dealerships are, and we match bad credit borrowers to them daily.

To get connected to a dealer in your area, fill out our auto loan request form. It’s completely free, secure, and carries no obligation. Get started now!

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Bad credit rating: How you get it, how it affects you and how to clear it

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Finance expert Lacey Filipich explains what you need to know if you have a bad credit score – including how you get one, how it affects future loans, and how to clear it.

As our options for accessing debt have expanded (I’m looking at you Buy Now Pay Later,) Australian consumers have gotten savvier about credit ratings affecting their finances.

Some of you may even have had your credit rating pronounced ‘bad’.

If you haven’t thought about your rating before, this might feel like getting a big fat ‘F’ on your school report card for a subject you didn’t even know you were taking.

If this bad credit rating is affecting whether you can get something you need – for example, a mortgage – what can you do to fix it?

First, let’s start with where that rating comes from.

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How your credit rating works

The credit rating system is a regulated shortcut. Lenders can see at a glance via your score whether you’re a good bet financially. It’s not the only thing they look at, but it’s part of the mix in assessing you as a customer.

Keep in mind that a lender is anyone who might send you a bill. Even a gas bill paid at the end of the usage period is like credit, right? They’re advancing you a service or product. Whether you pay them, on time and in full, is a reflection on how you treat debt.

Over time, your behaviour with debt generates your aggregated score.

Your rating depends on:

  • What kinds of debt you’ve used before.
  • Whether you’ve paid back those debts on time.
  • Whether you defaulted on any bills or repayments, meaning you haven’t paid by the agreed date and/or to the agreed amount (time and dollar value limits apply).
  • Applications you’ve made for credit elsewhere.
  • Whether you’ve been bankrupt, or had to negotiate an agreement to change how you repay a debt through legal channels.
  • How many requests there have been for your credit report from other credit providers.

Actions perceived as positive, such as paying your debts in full and on time, improve your credit rating.

Actions perceived as negative, such as missing payments or defaulting or a lot of credit checks, reduce your credit rating.

And it doesn’t matter what you bought with the debt. Credit ratings don’t reflect the value of the asset that debt paid for.

RELATED: 7 essential money hacks for first time parents

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What is a ‘bad’ rating, and how do you get one?

There are three main credit reporting agencies in Australia: Equifax, Experian and Illion.

Just to make things difficult, they use different scales (0 to 1000 or 1200) and different cut-offs to define ‘good’ and ‘bad’. Thanks *so* much, guys.

With Equifax, ‘bad’ is 505 or below. For Experian, it’s 549 or below. And with Illion, it’s 299 or below.

Because credit ratings are based on rolling information – generally five to seven years’ worth of your monthly behaviours with debt – they can change a lot.

If you repeatedly pay bills late, or you default on debts you’ve agreed to, or you apply for lots of different forms of credit, your rating drops.

You might also have an adverse impact from something that you’d consider unfair or wrong appearing on your credit report.

RELATED: Home loans: Is fixed or variable the best option?

Can you fix your credit rating if it’s bad?

If your application for a loan has been knocked back due to a bad credit rating, it’s a good idea to check your report via one of those three agencies.

Mistakes can happen. Incorrect names or erroneous account details might mean you’ve been attributed to actions that belong to someone else.

Intentional fraud can also happen. If someone steals your identity and starts racking up debt against your name, you want to get that sorted quickly.

There may also be notes on your file that you consider unfair. Perhaps the lender didn’t notify you properly, or listed a default while you were disputing the charge (which they shouldn’t).

To fix errors or unfair items, you can request amendments. You’ll get a positive impact on your credit rating quickly this way.

Sometimes, a poor credit rating is just like the impact of poor diet or no exercise. It’s real, and it’s down to your behaviour.

And just like diet and exercise, quick fixes aren’t usually effective. It’s about consistent, positive debt behaviours. Over time, these little steps add up to an improved credit rating.

Firstly, Pay. Your. Debts. On. Time. All your debts – utility bills, credit cards, mortgages etc.

If you can’t make your payments, speak to your lender proactively so you can agree a mutually satisfactory arrangement. That means you don’t get a strike against you with the credit agencies. Consider talking to a financial counsellor if you’re using debt to cover basics, as that’s is not a good place to be.

Secondly, use debt judiciously. Don’t apply for any and every credit card. Keep your credit card limits to a reasonable minimum.

Finally, channel the old Pantene mantra: it won’t happen overnight, but a good credit rating will happen (if your behaviours are positive).

Be patient and sensible, and you’ll get there.

Lacey is the founder of Money School and Maker Kids Club, where she shares lots of ideas and tips on the whole family being smarter with their earnings. 

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What Does an Extended Car Warranty Cover?

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If you purchased a brand-new car, then you’re covered under the manufacturer’s warranty until a certain mileage point or age limit. What happens after you’ve met these limits? For those who want extra coverage on their vehicles, extended warranties can be an option for used cars.

Understanding Extended Warranties

What Does an Extended Car Warranty Actually Cover?If something happens to your vehicle that your insurance company doesn’t cover and the car’s manufacturer warranty is expired, you’re left to foot the cost of repairs. For this reason, many borrowers consider buying an extended warranty for their used vehicles.

An extended warranty, also called a vehicle service contract, is essentially additional coverage on your car, and the name is somewhat inaccurate. Extended warranties don’t “extend” the original warranty offered by the manufacturer. They’re actually third-party service contracts that cover certain vehicle repairs for a set amount of time and/or mileage.

For those who rely on their cars heavily day-to-day, service contracts can offer some peace of mind when you’re driving a used vehicle. Extended warranty coverage varies greatly, and no two offered by dealerships are likely to be the same.

To see what an extended warranty truly covers, ask for a list of the inclusions and exclusions from the finance and insurance (F&I) manager at the dealer where you’re purchasing your used car.

What Vehicle Service Contracts May Cover

Many service contracts can mimic the manufacturer’s original warranty. Some cover the transmission and engine, and associated parts of these two key systems like seals and gaskets. Some extended warranties can cover most parts of your vehicle, including the key components (like the engine and transmission) and things like air conditioning and maybe even the power seats.

As a good rule of thumb, these things typically aren’t covered under extended warranties:

  • Regular maintenance
  • Brakes, clutches, windshield wipers, and lights
  • Regular wear and tear (like interior damage)
  • Body damage (dents)
  • Modifications
  • Tires

Keep in mind that most extended warranty claims come with deductibles, and there tend to be rules and exclusions that don’t come with a manufacturer’s warranty. Often, the dealership where you purchased the car and service contract requires that you go to their service center to repair your vehicle under the warranty.

On top of that, some extended warranties require that you pay for the repairs up front and then file a claim to be reimbursed for the cost later. Be sure to read all the fine print of a service contract, and feel free to ask lots of questions. You’re the one spending the money on it, after all!

When to Buy an Extended Warranty

Manufacturer warranties can last for a number or years, or up to a certain mileage. New cars often come with bumper-to-bumper coverage for around three years or 36,000 miles, as well as a powertrain warranty that’s normally good for around 10 years or 100,00 miles.

If you’re purchasing a used vehicle, check to see if it’s still covered under its manufacturer warranty before you consider buying an extended warranty.

In most cases, if the car you’re purchasing is outside of the original new vehicle warranty, the F&I manager offers you a service contract when you’re wrapping up your contract. F&I managers typically have a whole menu of options that you can consider adding to your auto loan.

Before you decide on an extended warranty, or any of the dealer add-ons available, make sure to ask questions about the contracts offered and the details about what they cover. If you decide to take one, the costs are usually then rolled right into your car loan payment.

Ready to Start Car Shopping?

When you’re buying a used vehicle, there’s a higher risk of something going wrong with it down the line. This is always a possibility with any car you’re fixing to buy, but with a used one, it can be hard to tell what the vehicle has truly been through. It’s even harder to predict what could happen in the future.

Extended warranties and cars can be long-term commitments, and it can feel like a hassle to find the right dealership for your situation. When you have less than perfect credit, finding the dealer that’s signed up the right lenders can be even more difficult, but it doesn’t have to be!

Here at Auto Credit Express, we’ve cultivated a network of dealerships that work with bad credit borrowers. Instead of driving all over town and hoping to find a dealer for your credit, fill out our free auto loan request form, and we’ll do the looking for you. We’ll search for a dealership in your local area that has the lending resources you need.

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