The average American’s credit score is 695, and that rating is just considered fair. With this type of score, you likely can get a mortgage or a car loan pretty easily. However, if you can boost your credit score, you can open yourself to much greater opportunities, such as different types of financing and lower interest rates. Those with scores below 650 have poor scores and those under 600 are considered bad. If you find yourself in either of these situation, hold on, you can expect a bumpy ride.
Poor and bad credit can make it impossible to obtain a merchant account from a traditional bank. Banks don’t want to take a risk merchants that have credit problems.
Since a merchant account, which allows a business to safely and efficiently accept and process credit and debit card payments, can make or break a business, you need to be creative to get what you need. If you want to get your business off the ground or you are trying to operate online and you have terrible, work to minimize your risk to lenders. Loosen the burden by following these tips to getting a no credit check merchant account.
Understand Your Issues and Tackle Them
It is important to remember that if your issues have been with personal credit as opposed to business credit, you are likely to get approved for a merchant account. Factors that can impact the final decision include: the frequency of defaults, how many you had against you, when they occurred, how much you owe, and whether debts have been settled.
Start Building a Reserve
One way around your credit score is to tell a processor you will collect a “reserve” of funds to cover any potential defaults. Many providers like the idea of having merchants having these financial safety nets. Unfortunately, you do have to have this kind of money for this to be approved by a processor. If you know your credit has problems, begin saving now.
Offer to Accept an ACH Delay
An ACH delay postpones the deposit of processing funds to your bank account. In this situation, a process holds on to your funds for a few extra days as a promise that all of your transactions are valid.
Find a High-Risk Merchant Account Provider
When you have bad credit, you are basically treated like a high-risk merchant. Therefore, it only makes sense to find a high-risk merchant account provider. Since your business carries more risk, you are likely to a slightly higher percentage rate and additional restrictions, such as monthly processing volume caps, as opposed to low-risk credit card processors, but you will have the ability to accept and process credit cards if you get approved for a no credit check merchant account.
Bad or poor credit isn’t a problem for merchant account providers that specialize in merchant account services for high-risk businesses. Since they are familiar with the challenges and obstacles that come with high-risk businesses, they are more likely to help you get approved. There are plenty of high-risk providers and processors out there, just make sure you do your research and check out customer complaints and reviews before you move forward with a contract.
Fix Your Credit
While trying to obtain a merchant account, you should do whatever you can to improve your credit score. You can boost your credit score if you pay your bills on time. On average, payment history accounts for about one-third of your credit score. Every time you miss a payment, you are lowering your score. How late you paid and how often you miss payments also are factors that lower your score.
If you can, pay down your debt. Carrying too many high-interest balances negatively impact your credit. Also, getting rid of these balances will save you lots of money in terms of interest payments.
Finally, double check your credit reports to ensure there are no mistakes. Five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for auto loans and insurance, according to a U.S. credit reporting industry study by the Federal Trade Commission. It is each consumer’s responsibility to ensure all information on their reports are accurate and complete. Even one mistake could mean the difference between a poor and a fair credit score.
When you have lousy credit, getting a merchant account can seem impossible. It doesn’t have to be if you prepare and take steps to minimize your risk.
When you are ready to apply for a merchant account, turn to eMerchantBroker.com (EMB), which specializes in high-risk processing services, including merchants with bad credit. EMB works with businesses that have poor credit histories, prior bankruptcies, and tax liens.