Why Do I Need A Business Credit Score
If your business is just getting off the ground, youre probably using your personal credit to do the borrowing. If things are going smoothly, you might be wondering why its necessary to establish separate credit for your business.
Getting financing may be easier: Establishing a solid business credit score can help increase your chances of landing a small-business loan or line of credit at favorable terms.
Rates on insurance policies could be lower: As your business grows, insuring it could get expensive. A high business credit score may help keep rates lower.
Business and personal finances are separated: Creating a credit profile for your business adds a layer of separation between your business and your personal finances. Keeping your finances separate makes it easier to track business expenses for tax purposes.
Borrowing power increases: Strong business credit can help you;get larger amounts of financing.
Which Rewards Are Important To You
You should also take into consideration the kind of spending you make. For example, if you spend a lot of money on travel for business, then The Business Platinum Card® from American Express might be the best card for you, as it offers 5x points on flights and prepaid hotels booked with Amex Travel. In other words, the more you spend on travel, the more youll be rewarded.
Its also a good idea to check out possible reward expirations, minimum redemption amounts and earning limits for cards before making your final decision.
Simply Put Business Credit Signals Your Companys Ability To Handle Its Finances Purchasing Power And Debt
Like personal credit, business credit is something you build over time. Business credit considers several factors and is expressed in the form of business credit scores.
Additionally, both business credit and personal credit can affect the rates you might pay for goods and services. For example, as a business owner, you may pay lower insurance premiums if your business credit scores are high. You might also qualify for lower interest rates on small business loans or lines of credit if you have good business credit.
These may all come in handy if youre looking to negotiate longer terms from vendors, which might give you more space to manage cash flow.
Well cover the basics of what business credit is, how its used, and tips on how you can build your businesss credit.
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Pros And Cons Of Getting A Business Credit Card
A business credit card can help you maximize your purchases, separate your expenses and save money on interest each year. These business credit cards offer bonus rewards on categories popular with small businesses, such as;office supplies,;airfare,;advertising;and;gas.
In fact,;business-specific bonus categories;are one of the main ways that business credit cards differ from personal credit cards. For more information about the best personal credit cards on the market, be sure to check out our;best credit cards,;best rewards credit cards;and;best travel credit cards;pages to find the perfect partner to pair with your new business card.
But you need to do your research before applying for a small-business credit card. While business cards often offer tailored bonus categories and additional benefits for business owners, they also have fewer consumer protections than personal credit cards.
Related:;The best business and personal credit card combinations
What Credit Cards Can You Apply For With An Ein
You dont have to look far to find a business credit card you can apply for with an EIN. Browse business credit cards from a variety of major issuers, and most will be accompanied by an application that looks something like the one below ).
The Tax identification number section is where youd put your EIN. As you can see, you have to use your SSN from the beginning if youre a sole proprietor.
In addition to Chase, most other big-name issuers, including American Express, Bank of America, and Capital One, have applications that work the same way.
The key issue is that the ability to apply with your EIN is by no means a guarantee that you wont have to submit to a personal , or that you wont have to fork over your SSN as well.
Thats because nearly every business credit card requires a personal guarantee, which means youre legally liable for its balance. And since that essentially makes you responsible just like any personal credit card, its no surprise that the issuer will want to know how youve handled past debts.
If youd like to give it a shot regardless, consider some of our favorite business cards, all of which offer employee cards and at least a few other basic business card benefits.
NOTE: Nearly all of the below cards will require a personal credit check and good personal credit .
- Additional Cards Annual FeeN/A
- Foreign Transaction FeeNone
Key Features
Enrollment required for select benefits; terms and limitations apply.
American Express® Business Gold Card
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Ink Business Cash Credit Card
Look at the Ink Business Cash Credit Card. Companies can get cash back with each purchase. Spend $3,000 in the initial three months from account opening. And youll earn a $500 bonus cash back.
There is a $0 yearly fee with a 0% introductory APR for 12 months on purchases and balance transfers. Afterwards, the APR is a 15.24 21.24% variable.
The card features travel and purchase coverage benefits. So, this includes an auto rental collision damage waiver and extended warranty protection.
Details
Earn extra cash back on business categories. So, these include office supply stores, telecommunications, gas stations and restaurants.
Note: this credit card has a balance transfer fee. Pay 5% of the amount transferred or $5, whichever is more. Also, there is a foreign transaction fee of 3%.
Capital One Spark Cash Plus: Best For Unlimited Business Cash Back
Annual fee: $150
Current sign-up bonus: Earn up to $1,000 in the first six months $500 once you spend $5,000 in the first six months, and $500 once you spend $50,000 in the first six months.
Why we like it: The Spark Cash Plus is a simple yet rewarding business card option. Youll earn 2% cash-back rewards on all your purchases, guaranteeing that youre earning a solid return no matter the purchase. As long as you keep your account open, your rewards never expire. You can also redeem your cash back in any increment, helping you keep your operating expenses low and adding more value year after year.
Standout benefits:
- The Capital One Spark Cash Plus is a charge card, meaning theres no preset spending limit. This is great for business owners who may have to charge lots of expenses on their card or need to go above their typical credit limit.;;
- No foreign transaction fees.;
For more details, read our Capital One Spark Cash Plus review.
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Can An Individual Apply For A Business Credit Card
When it comes to credit cards, a business is any venture that generates income. So if youre an eBay seller, a DoorDash driver, or a freelancer, you can absolutely apply for a business credit card. In fact, some card issuers offer cards with rewards specifically designed for individuals .
Individuals claiming sole proprietorship of their business dont need an EIN to apply. Instead, credit card companies will use your social security number to check your consumer credit score. Once approved, you can use your business credit card to cover your business expenses and start raking in rewards.
How To Qualify For A Small
Here are the steps to take if youre considering applying for a small business credit card:
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Can You Apply For A Business Credit Card Without A Hard Personal Credit Inquiry
Personal credit inquiries can throw a wrench into the business card application process.
Poor personal credit could decrease your likelihood for approval despite your business being perfectly capable of repaying its debts.
And even if thats not a concern, hard inquiries can have a negative impact on your personal credit scores, though its generally temporary and minor.
There arent many cards that dont require personal credit checks and guarantees, and they typically require that you represent a large and profitable corporation.
The good news? There;are ways to get business credit cards even with poor personal credit .
Here are your options:
Receive Your Card And Use It Wisely
Once approved, you should get your business credit card mailed to your business address within a couple of weeks. When you receive it, activate the card and commit to using it wisely, so you don’t run into trouble later on.
Review the terms and conditions carefully, plus the rewards program details if you get a rewards business credit card. This way, you can use the card correctly and maximize your benefits.
Now that you have a business credit card, only use it for business expenses and avoid mixing it with personal expenses. This will help you during tax time and keep your personal finances separate from the business.
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American Express Business Gold Card
3.5/5
- 4X Get 4X Membership Rewards® points on the 2 select categories where your business spent the most each month.
- 1X 1X is earned for other purchases. **
- 25% Airline Bonus: Get 25% points back after you use points for all or part of an eligible flight booked with Amex Travel, up to 250,000 points back per calendar year.*
- 4X Get 4X Membership Rewards® points on the 2 select categories where your business spent the most each month.
- 1X 1X is earned for other purchases. **
- 25% Airline Bonus: Get 25% points back after you use points for all or part of an eligible flight booked with Amex Travel, up to 250,000 points back per calendar year.*
Applying For A Business Credit Card Using An Ein
Because business credit cards dont require collateral and are easy to use and apply for, theyre a very common way for small businesses to secure a boost of funding. If youve ever applied for a personal credit card, you know you need to input your Social Security number , a unique 9-digit number that identifies you as an individual with the United States government, including the Internal Revenue Service.
For small business owners, there are other ways to identify yourself and your business when applying for credit cardsmost commonly, businesses have an Employer Identification Number, or EIN. You can apply for some business credit cards using an EIN, although in most casesbut not allyou have to provide a personal SSN as well. There are good reasons to utilize an EIN for business credit cards, so you should understand how you should identify yourself before you submit any applications.;;
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Small Business Credit Card Faqs From Bank Of America
You can also request cash advance checks from us, which can be used just like personal checks. Or you can get cash with your credit card and photo ID at most;
Find small business credit cards with cash back, airline and travel rewards points. Shop for a new credit card that fits your business needs and apply;
Obtain An Individual Taxpayer Identification Number
A standard alternative to a Social Security number is an ITIN. This is a tax-processing number used by the IRS for individuals who are required to have a U.S. taxpayer identification number but dont have and arent eligible to obtain an SSN. Examples of individuals who need to obtain an ITIN include:
- Nonresident aliens required to file a U.S. tax return
- U.S. resident aliens filing a U.S. tax return
- Dependents or spouses of a U.S. citizen/resident alien
- Dependents or spouses of a nonresident alien visa holder
- Nonresident aliens claiming a tax treaty benefit
- Nonresident alien students, professors or researchers filing a U.S. tax return or claiming an exception.
You can apply for an ITIN with the Internal Revenue Service by filing a Form W-7. You can submit an application when you submit a federal income tax return. You will need original documentation or certified copies of proof of your identity and foreign status.
Note that it may normally take up to 7 weeks for the IRS to process your ITIN application. If you file from abroad or during the peak tax season from Jan. 30 to April 15, it can take up to 11 weeks.
Once you have an ITIN, you can apply for an employer identification number. An EIN is similar to an SSN or ITIN, but it is used for businesses rather than individuals. You are eligible to apply for an EIN online if:
Once you have your ITIN and EIN, you can use them to apply for your business credit card.
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Business Credit Versus Personal Credit
Business credit is similar to your personal credit in that it allows potential creditors to judge what kind of credit risk your business poses. A higher;business credit score;could mean youll have better access to loans and lines of credit, lower interest rates, and cheaper insurance premiums for established firms.
Having business credit helps keep your business and personal finances from affecting each other in the long run.
An important thing to remember when considering both business and personal credit is that making payments on time is crucial to avoid damaging your credit score.
Why Would You Want To Get A Business Card Only Using Your Ein
Getting a business credit card using your EIN is advantageous in a few ways. For example, it allows you to build business credit and get the benefits of using a credit card, like greater purchasing flexibility and earning cash back or travel rewards, without positioning yourself as a guarantor of the amount owed if your business is unable to pay.
Additionally, using an EIN helps you get access to a business credit card account if:
- You have poor or no personal credit. If you dont have a strong personal credit history, it might be harder to get approved for a business credit card using your SSN.
- You want to avoid personal liability. As noted above, by using an EIN for your business card, youre not using yourself as a personal guarantor of the balance through your SSN, so you cant be held accountable if the business goes under.
- You dont have an SSN. If you arent a U.S. resident and used an Individual Taxpayer Identification Number to request an EIN through the IRS, a business credit card using an EIN can help open the doors to the benefits of a credit card.
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How Can I Get A Business Credit Card Without A Business
You can apply for a business credit card without a business by using your personal details in the application. Your name will be used as the business name, and if you don’t have an EIN, you will use your social security number. A sole proprietorship is considered a business, but the creditor may ask for proof that you are in business before approving you for a business credit card.
What Is The Easiest Business Credit Card To Get
Any secured business credit card will likely be the easiest business credit card to get. This is because secured credit cards dont typically require good or excellent credit for approval. Secured business cards like the Wells Fargo Business Secured Credit Card and BBVA Secured Visa Business Credit Card dont require good credit because you have to make a minimum deposit to qualify for either card.
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Best Business Credit Cards Of September 2021
This page is a marketplace where our partners can highlight their current card offers. The reviews and insights represented are editorial, but the order in which cards appear on the page may be influenced by compensation we may receive from our partners.
If youve got a business new or old, big or small you should consider getting a small business credit card. Here are the best business cards from our partners.
Terms & restrictions apply.See rates & fees
What You Need To Apply
Here comes the fun part: Applying for a business credit card when you’re just starting out can make you feel more official. It’s a little different than applying for a personal credit card.
Here’s a rundown of how to fill out the application:
If you have a corporation or an LLC, enter the business name that you registered with your state government.
If you’re a freelancer or sole proprietor, just use your legal name on this line.
Tip
Incorporated businesses and partnerships enter their federal Employer Identification Number. This is a nine-digit number issued by the IRS for tax reporting purposes.
If you’re a freelancer, you’d enter your Social Security number on this line .
Beneficial owners
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