Getting A Merchant Account With Bad Credit
If you’re the owner of a small business and you want to start accepting credit card payments from your customers, you will need to get a merchant account. To get your application to a merchant account provider approved, you have to satisfy certain requirements. These might include having a good business plan and a good credit score. Most providers check your credit score to ensure that you are a legitimate business owner. While they aren’t as strict with this information as a typical bank, it might be a little harder to get your account application approved with a bad line of credit.
What is Your Business Type?
If your small business is an LLC (Limited Liability Company) or Corporation, your personal credit score doesn’t always come under scrutiny. Instead, the credit score of your business is taken into account. To verify that you are indeed the owner of the company, your credit may be checked as well. If possible, contact the IRS to figure out if you have an employer ID number you can provider the account issuer.
How Your Credit Affects Your Rates
A discount rate is a fee that is charged by any merchant account provider every time there is a credit or debit card transaction in your business that deposits money into the account. You have to pay this fee yourself every time your customers swipe or tap their cards at your point of sales system. With some merchant account providers, a system is in place where your credit score directly affects how high the discount rate is for these transactions.
If you have bad credit, you might be charged a higher rate, at least for a while. This upcharge results in less profit, which in turn makes this business method less profitable for you over time. When checking out merchant account providers, consider all your options carefully so you can weed out those with a discount rate that seems too high. Also remember that the rate can be lowered if you prove to be a valuable customer to your merchant account provider. While doing this, don’t forget to watch out for additional fees too!
Does Your Bank Offer the Service?
If you have a standard bank account (you probably do if you own a business) call them up. Talk to the manager of the bank to see if the bank offers a merchant account service. Some banks offer merchant accounts as part and parcel of their business account package. In cases like this where you already have a business account at the bank, your credit may not be checked before you apply for it.
If your accounts at the bank are generally positive concerning your payments, your bad credit may not affect you. Remember too that the fee you pay to set up and operate a merchant account can be lower if you already have a working relationship with the bank.
Overseas Merchant Providers
Sometimes when dealing with bad credit, people look outside the borders of their own country for a merchant account provider. There are providers in many different countries who are more than willing to take on your business. However, high processing fees and discount rates are charged if your account is opened outside your country. There are currency restrictions to think about, payment processing laws and taxes to worry about too.
Even if your application has been denied before, don’t lose hope. Even with your bad credit report, you should know that there are merchant providers that are willing to work with you.
While you do have to be prepared to pay a higher discount rate than most other people would, in order to open certain types of accounts, this is a necessary sacrifice that needs to be made. In virtually all cases, it is advisable that you open a merchant account for your business. With this type of account, you can easily start processing credit and debit card payments from your customers with ease.
