Business banking for bad credit explained
Even though having a bad credit history can cause a lot of worry for many businesses, there are still other solutions available and a lot of firms are unaware of their options.
Although your options are limited due to your bad credit history, it does not mean that it is impossible for you to get a business bank account. Bad credit business bank accounts are a good option for those with a bad credit history because a lot of providers allow you to apply with no credit check.
Financial services are essential to all enterprises, which means it is very important that you have a full business bank account. Unfortunately, those with bad credit can struggle with this, bad credit business accounts will let the majority of businesses who apply with bad credit open and manage an account, regardless of their poor credit history.
This can include direct debits, multiple debit cards, online banking and even overdrafts. These accounts are also much quicker to setup now and for some businesses they can be cheaper than high street banks.
Benefits for bad credit bank accounts
Get an overdraft and free direct debits
Many accounts for businesses with poor credit will offer an overdraft facility, however, this is generally dependent on passing certain criteria. These accounts now also offer the option to set up direct debits.
Helping you improve your credit rating
Running an account sensibly over a sustained period can help improve your credit rating. As you build your credit over time it puts you in a better position in the future to switch business accounts.
No credit check business account
There are generally no credit checks when opening a bad credit business bank account and in many cases approval can be almost immediately, which means your business can begin managing its cash flow as soon as possible offering a piece of mind to yourself and your business.
5 steps to improving your business’ bad credit
Whether you like it or not, your credit score makes a huge impact on the road your business leads. You may believe ignorance is bliss but when it comes to a low credit score it is not something that can be ignored.
So what are the first steps of improving your bad credit?
Monitor your credit report
In order to monitor your credit report you must ensure that the information you have provided is correct – this means that if there are accounts associated on your report that aren’t actually yours then you must remove them, as this will affect your credit score. Any negative information that is from over 7 years ago should not be included in your credit report. Any bankruptcies older than 10 years must also not be shown on your report.
To access you credit report you can visit; Equifax, Experian and Transunion.
Set up automatic payments
If your business has a loan or credit card that requires monthly payments, then it is beneficial to organise the payments to come out automatically – making payments on-time is an important factor to your credit score.
Avoid applying for unneeded credit
Applying for credit can add negative points which can affect your score in the long-run. Filling out just one application can add up to 5 points to your credit rating. After filling out 5 unnecessary applications you have added 25 pointless negative points to your report.
Don’t let debt get carried away
If there is an issue with a vendor then by all means necessary do not let it go to a collection, as this will have a huge impact on your report. If you have to, pay under protest – this will lead to the small claims court. However, NEVER let it get to the point of being sued. Judgements and lawsuits are extreme hits to your report.
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