A bad credit could have a lot of consequences, especially if you’re running a business. But in a time when almost every business is relying heavily on automated payment processing, there comes a time when you’ll need to apply for a high risk merchant account that will allow you to process debit and credit card payments conveniently.
Now if you’re worried about getting approved for one if you have bad credit, here are some tips to help you out:
You can use your business credit.
If your business is built as a C-corporation or Limited Liability Company, you have the option to have your business credit pulled out instead of your personal credit.
This will give you a better chance at getting approved for a merchant account. Just make sure to ask the Internal Revenue Service for your employer identification number, as it may be part of the requirement for your application.
Fulfill all the required documents.
Before you could apply for a merchant account, make sure that you have all the documents needed to go with your application.
While requirements could vary in different institutions, some of the most common documents required include a valid, government-issued ID, a Social Security Number or Employer Identification Number, a bank letter or pre-printed voided check, 3 months of the most recent processing statements or bank statements, a fully operational website and a chargeback ratio of less than 2%.
Although there are no guarantees for you to get approved, having the complete requirements will give you a better chance at getting considered by underwriters for a merchant account.
Take care of any unpaid bills.
Before you could get approved for a merchant account, an underwriter will assess your risk first by looking at several factors including your credit score, your credit card processing history, your website and your bank statements. If he sees any unpaid bills, late payments, a history of high chargeback ratios and a negative account balance, your application will most likely be rejected.
So if you want to get approval, it’s very important to take care of any unpaid bills and settle any financial obligations before submitting your application.
Ask your bank
If you’ve already tried applying in different high risk merchant providers to no avail, you can try asking your bank manager if they offer merchant accounts.
Having an existing business account with a bank gives them more confidence in you as a client, which in turn gives you better chances at getting approved for a merchant account even if you have bad credit. You can also save up on startup costs if you open a merchant account with the same bank where you have a business account.
Getting approved for a merchant account is not the easiest thing to do if you have bad credit. This is why you need to work hard in straightening up your financial status, business credit score, and completing all your requirements to give your business a better chance at being granted a merchant account, which will surely benefit your business in the long run.