If you have had a credit card application rejected it may be worth checking to see if you are eligible for a secured card instead.
A secured credit card is only issued after the customer makes a collateral deposit. This sum then becomes the credit limit for the card in question. For example, if you place $800 in the account, then you can ‘borrow’ up to that amount on your card.
Even if the owner or the business itself has a poor credit rating, the lender who issues a secured credit card knows their money is guaranteed because they are always holding sufficient collateral to cover whatever has been spent.
A small business secured credit card can actually improve your credit score. This is because the issuers send regular reports to the bureaus where your credit rating is calculated. Providing you always pay on time and do not incur any penalties, your credit score will slowly improve.
If you are unfortunate enough to default on the card, your security deposit is there to cover the cost of your borrowing. This means that, although the company will initially pursue you to continue making your monthly payments, you will not be chased by debt collection agencies. You will, however, suffer a sharp blow to your credit rating which may seriously harm your chances of getting credit in the future.
Although they may be a little more expensive, some small business secured credit cards also carry a number of benefits that can offset some of these costs. These can include extended warranties on certain items of business equipment, free travel insurance and free insurance from auto rental firms.
The best firms will also place your security deposit into a special account where it will earn interest. While this may not produce a great deal of money, it will at least go some way towards offsetting the other costs of owning such a card.