Suffering from a bad credit score can feel like having someone put your only car up on cinder blocks—all of your efforts to move forward are sabotaged before you even get started. How can you convince anyone to get on board with your business venture if your bad credit has taken the wheels off your financial prospects and capabilities? The cost of bad credit can be staggering and yet somewhat unidentified. How much precisely does a bad credit score cost you? Even with mitigating factors like a specialized bad credit merchant account, a poor credit score can cripple your finances for years to come.
Where does bad credit hurt?
Financial common sense indicates that bad credit hurts you with higher interest rates, larger deposits, expensive premiums, and it can limit your ability to apply and receive quality financial services. It’s like having something constantly corroding the foundation of your business, creating lots of little cracks and draining expenses that destabilize your business. A high risk, bad credit merchant account will also have higher fees and interest rates than a normal merchant account from a merchant services provider. These costs pile up month by month and year by year, hurting your bottom line.
Analyzing Bad Credit and Credit Cards
Let’s take a look at a case sample where bad credit can cripple your business: credit cards. A general use credit card averages a 15% rate depending on the card issuer. If you have bad credit this rate can balloon up to 30%. Now let’s suppose you owe $5000 in credit card debt—not an exorbitant amount by any means. Over 27 years, making the minimum payment at a 15% rate will run you $12,000 in order to pay back your debt. At 30%? You will pay back $132,000 over 30 years. That is a lot of damage for your business’ bottom line to absorb.
Handling Bad Credit
Bad credit reaches into other areas of your business aside from credit cards. If you choose to take out a mortgage instead of leasing, if you need to make a deposit to cover chargebacks with a bank, or if you need to open a merchant account you’ll feel the pain and damage from bad credit. You will feel like you’re stuck up on those cinder blocks. The only solution to bad credit is to make your payments and rebuild your credit. Find a specialized bad credit merchant account with the best rates and fewest fees to jumpstart your revenue stream so you can begin making consistent payments.
Bad credit is crippling for small business owners but it is by no means a death blow; you can get the wheels back on your business and start it rolling towards a stable financial future.
Does your business need Payment Processing? Click below to start the easy application process today!