Many small businesses saw their credit score drop over the past year or so due to the fact that economic hardships caused many to become reliant upon credit cards to stay afloat. This situation is similar to many personal credit card holders’ predicament but for those businesses who are now on a firmer financial ground, rebuilding their credit history and repairing their bad credit score has become a high priority.
Difficulties arise when a small business has a bad credit score, like the ability of these companies to obtain a small business loan, so many business owners are looking for ways in which they can increase their credit score in a timely manner. Typically, a business or individual who sees their credit score drop may either have trouble dealing with a higher interest rate on their credit card or may be denied access to credit. Yet secured credit cards for small businesses are available to help repair a credit history and increase a bad credit score.
Secured credit cards have often been used by businesses and individual consumers alike to repair their poor credit history and increase their bad credit score. Secured credit cards require that a sum of money be deposited into a bank account, which will secure the card and protect the lender against any loss. However, a secured credit card can be used just like an unsecured card and can help businesses with a variety of purchasing needs.
Yet, a secured credit card is often used as a tool to show creditors that the cardholder is a responsible financial risk and, once a business or individual cardholder begins making purchases on their card and promptly paying off their charges, their bad credit score begins to improve. While it will take financial discipline and smart budgeting habits before the secured credit card can be beneficial for a small business, many companies have been using this type of credit card in order to repair their financial standing.
While there are a variety of lenders who offer a secured credit card, any small business who may be in the market for this type of card will need to do their homework and find the secured credit card that will not charge excessive interest or fees and will work for their personal situation by helping them achieve a better credit score for their company.