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Getting a business credit card is one of the most powerful steps you can take to set up your business.
This is a great way to separate your business expenses from your personal ones. But beyond that, using a business credit card can help you build a solid credit profile for your business. Credit bureaus track business credit cards and loans when calculating a credit score for a business.
If you develop a track record of paying your business credit card bills on time and don’t push it to the max, it will help you keep building business credit. So how do you apply for a business credit card? Just follow these steps:
1. Check your personal credit score
Typically, you will need to personally guarantee a business credit card, and credit card companies will evaluate your loan application based in part on your personal credit history.
If your credit card score needs improvement, spend three to six months working to reduce your credit utilization rate—the percentage of your available credit that you use—and make sure you pay your bills like clockwork. This will make it easier to get a business credit card.
2. Decide what type of business card is right for you
If you need a little time to turn a profit, a business credit card can help by allowing you to keep your balance within your credit limit month after month as long as you make the minimum monthly payment. This can be useful if cash flow is limited, especially if you can get a zero interest business credit card for a few months.
A dedicated credit card for your business can help you build business credit, but only if the issuer reports to business credit reporting agencies. Not all. Before applying for a card, ask and make sure the issuer communicates your progress where it counts.
It is important to analyze the needs and expenses of your business before choosing a credit card for it. If you’re trying to save money, a simple fixed-rate credit card with no annual fee, such as the Ink Business Unlimited® credit card, may be right for you.
But a business credit card with a hefty annual fee can be good for your business. For example, if your business requires a lot of travel, a card like the Business Platinum Card® from American Express will provide you (and possibly your employees) with rewards and benefits that can be used for business travel.
3. Gather the business information you need for your application.
Review the application before you start entering information so that you have all the necessary documents in one place. On a business credit card application, you are usually asked to enter the following information:
- Legal name of the company (for example, Acme LLC)
- Company name on the card
- Work mailing address and phone number
- Type of business (general industrial, category)
- Taxpayer Identification Number (also known as EIN)
- Annual business income
- Amount of workers
- Years in business
If you do not have an EIN, you can apply for an EIN free of charge through the IRS.
4. Gather Personal Information You May Need
Business credit card issuers require you to provide personal income and sometimes monthly expenses. Most of them ask for the same information as when applying for a personal card, in addition to your business information.
For example, in the “Personal Information” section, Chase Ink’s business card apps ask for your “authorized employee title,” home address, date of birth, primary phone number and email address, and total annual gross income.
5. Submit an application
Many credit card companies allow you to apply online, and you can apply for many cards through CreditCards.com. Only apply for one card at a time and see how you get on.
What to do if your business credit card is denied
If you are turned down because you haven’t built up enough credit, all is not lost.
If you have no credit or bad credit, you may need a secure business card first. A secured business credit card often requires a deposit for the privilege of using the card. While this setup isn’t ideal, if you’re short on cash, being able to make a deposit will give you a chance to prove you can use credit responsibly.
If you build up a steady track record of paying your card on time and, ideally, above the minimum balance, you can move on to better credit card deals in the near future.
bottom line
A business credit card is a great way to separate your business expenses from your personal expenses. It can also help you build a strong credit profile for your business. Be sure to gather all the personal and business information you need to apply.
Editorial disclaimer
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
