If you want to accept credit cards as payments for your business, you need a merchant account. However, it’s not always easy to find a merchant service provider that will approve your account and give you reasonable transaction rates if you have bad credit. You’ll need to improve your credit score to improve your chances. Here are three reasons why improving bad credit can help you get a merchant service account.
Merchant Service Providers Don’t See You as a Risk
When you have bad credit, it’s generally a sign that you’ve been financially irresponsible in one way or another. Bad credit results from not paying loans back on time every month, filing for bankruptcy, and other poor money management tactics. Merchant service providers typically don’t want to work with people with bad credit because they risk not getting paid. Keep in mind that a good credit score shows that you are trustworthy and that you honor your financial commitments. To prove your trustworthiness, you’ll ideally want to improve your credit score until you reach the 700s.
Your Application Is More Straightforward
When you have good credit, your merchant service account will typically be clean, simple, and straightforward. With bad credit, your paperwork can get complicated quickly. Having a bad credit score doesn’t guarantee that you’ll be denied, but you will have to provide an explanation for credit issues to show that you won’t fall into the same trap with your merchant service provider.
Remember that there are all sorts of reasons why a person might have bad credit that are not necessarily red flags for merchant service providers. For instance, medical emergencies, a divorce, and other financial hardships can happen to anyone. As long as you still have a credit score in the 600s, there’s a good chance you’ll get approved for a merchant services account.
You Aren’t Limited to High-Risk Merchant Service Providers
When you have a credit score under 600 and you don’t have a cosigner to back you up, your only option for a merchant account might be a high-risk provider. This is because low-risk providers tend to reject applicants with bad credit, which can limit your options quickly. High-risk providers are great for businesses in high-risk industries, but they aren’t ideal for all businesses due to the higher transaction rates.
When you need credit card processing with bad credit, remember that you still have options. You may need pay higher rates initially until you can prove that your business is financially stable. If this is the case for you, it may be best to start with a high-risk merchant service provider. You can always try to switch to a low-risk provider with lower rates in the future.
Improving your credit score increases the chances of getting approved for a merchant account. Make sure to research your options so you don’t get discouraged by one denial after another, and consider using a high-risk merchant service provider to get started with your merchant service account.