What to do if you're turned down for a business credit card

First step: Understand why your application was denied

Rebecca Lake
Personal Finance Writer
Making complex credit topics simple

What to do when you're business credit card application is turned down

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A business credit card can make running your business easier, while potentially earning miles, points or cash rewards as you spend.

Business credit cards can also be easier to qualify for than, say, a business loan. However, you may not always be a lock for a business card.

“A company can have millions in the bank and still not get a credit card,” says Henrique Dubugras, co-founder and CEO of Brex, a corporate credit card designed for startups.

If you’ve applied for a business credit card and been declined, here’s what to do next.

See related: Best business credit cards

Understand why you were turned down

There are several things that can lead a credit card company to deny your application for a business card.

No credit history

“The most common reason we see business owners and startup founders being denied credit is having little to no existing credit history,” says Dubugras. “Without ab existing credit history, traditional banks and credit institutions will not provide them a card to access the funds necessary to get their businesses up and running.”

See related: 5 things you should know about business credit scores

Negative credit history

Negative credit history can be just as damaging as no credit history. A recent delinquency on your personal or business credit can work against you when applying for a card, says Carlee Linden, who authors the business loan blog for consumer comparison site BestCompany.com.

“Credit card issuers will be looking at your history of payments and will take into consideration what type of delinquency and how long ago the delinquency was,” says Linden.

The more recently a black mark shows up on your credit, the more impactful it’s likely to be in credit decisions.

Too many card applications

Applying for multiple cards within a short span of time could also be a red flag to card issuers.

“I was personally turned down for a business credit card because I had applied for a personal credit card from the same company in the same six-month period,” says Stacy Caprio, marketing strategist and serial entrepreneur.

You could also be denied if you’ve applied for multiple cards with different banks. Chase, for example, imposes the 5/24 rule, which is if you’ve opened five or more personal credit cards from any bank in the previous 24 months, you might not be able to get a Chase business credit card, according to Million Mile Secrets.

See related: How Chase's '5/24 rule' can impede quest for rewards cards

"The most common reason we see business owners and startup founders being denied credit is having little to no existing credit history."

Scant business financials

Newer businesses can also be denied a business credit card when they lack solid financials.

Doug Mitchell, owner of Ogletree Financial Services, an insurance brokerage based in Auburn, Alabama, applied for a business credit card with American Express when his agency was brand-new.

“We were a startup insurance agency, so we really had no financials to share,” says Mitchell. After being denied for a business card, he and his business partner resorted to personal credit cards, home equity loans and their current income to finance initial business expenses.

A flawed application

It’s not just bigger things that can trip you up when applying for business credit either.

Entering your income incorrectly when you apply or not providing any supporting documentation the credit card company asks for could land your application in the discard pile.

What to do if you’ve been denied for business credit

If you’re denied for a business card, don’t write off getting approved for one altogether without first taking these steps.

1. Review your personal and business credit reports

The Fair Credit Reporting Act allows you to request a free copy of your credit report if you’ve been denied credit.

  • To get your credit report, you must submit a written request to the credit bureau that furnished the information a creditor used to deny you.
  • You’ll also need to submit a copy of your adverse action notice, which the creditor should have provided to you.
  • This notice explains why you were denied credit and which credit bureau they got your information from.
  • You have 60 days from the date you were denied to request a free copy of your credit report.

Once you receive it, check for negative marks or errors that might be dragging your credit score down. If you see an error, take action to dispute it.

See related: 10 surefire steps to get errors off your credit reports

"We became more attractive to credit card companies because we paid our balance in full and on time each month. After a couple [of] years of steady cash flow, growth and paying on time, getting business credit cards was no longer an issue."

2. Ask the credit card company to reconsider

Sometimes, getting approved for a business credit card is as simple as asking for them to take another look at your application. That tactic worked for Caprio.

“I called in and explained the situation, and they reconsidered and manually approved me,” she says.

  • Requesting a reconsideration may only work if you have a pre-existing relationship with the bank or credit card company, cautions Dubugras.
  • And if you’re asking for reconsideration, be prepared to make a strong case for your business, especially if it’s still in the early stages.

“Cash or equity in a business can be overlooked, relative operating history and revenue, even though cash and equity are the best indicators of ability to pay,” says Dubugras. “So, in this situation, it’s helpful to focus on these.”

See related: Reconsideration lines offer a second chance at credit card approval

3. Improve your financials and credit

Asking for reconsideration could fast track you to a business credit card approval but sometimes you may have to take the slower route.

In Mitchell’s case, he focused on strengthening the business’s fundamentals and practicing good habits with personal credit.

“We became more attractive to credit card companies because we paid our balance in full and on time each month,” he says. “After a couple [of] years of steady cash flow, growth and paying on time, getting business credit cards was no longer an issue.”

He’s since been approved for The Business Platinum® Card from American Express, which is a top-shelf business card with premium perks.

His business charges around $20,000 per month to the card, allowing him to accumulate rewards quickly and easily justify the $450 annual fee.

In addition to focusing on business growth and improving your personal credit, take care of your business credit as well.

Establishing vendor lines of credit and paying vendors on time each month can help you begin building business credit history if you’re not yet able to qualify for a credit card or loan.

Tip

Tip: Dun & Bradstreet Paydex Score and Experian Intelliscore Plus are two of the most commonly used business credit scoring models. See “6 ways to maintain a good business credit score” to learn more.

4. Consider traditional business credit card alternatives

A secured business card can offer purchasing power when you can’t land a traditional business credit card.

“If you have no credit and no other option, secured cards are typically a solid choice,” says Dubugras. A major drawback, however, “is that they’re operationally painful to maintain, particularly for busy founders and business owners.”

Secured cards can also come with higher annual fees or annual percentage rates if you carry a balance, both of which can cost your business money.

“My advice is to use those and pay the bills off frequently and often, being super careful not to revolve,” says Dubugras.

Not only will this help to minimize interest charges, but positive account activity can strengthen your credit score. Just remember to keep track of what you’re charging so you’re not putting too much strain on your business cash flow.

“At the end of the day, business debt is still your debt,” says Mitchell.


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Updated: 11-19-2018