Tips on Getting a Bad Credit Merchant Account

Apr 6, 2022

Businesses can end up with bad credit for a host of reasons, some of which may have been out of their control. 

Missed or late payments, irresponsible financial partners, owing more money than they generate, or even bankruptcy are just some of the issues that can contribute to bad credit. 

Whatever the reason, just because a business has been turned down for bad credit does not mean they have to stop doing business. A second chance may be all they need to finally reach success.

However, poor credit does make finding a merchant account provider difficult.

A merchant account is necessary to process all cashless payments, including credit, debit, check, online or mobile payments. A merchant account can provide physical equipment, such as credit card terminals, as well as online payment gateways.

A merchant account can provide enhanced security and help to prevent fraud and chargebacks.

There are many reasons a business would desire the services of a merchant account provider. Yet, many will automatically reject applicants with poor credit.

Easy Pay Direct is a merchant account provider that works with high risk businesses, including those with bad credit. 

We work with business owners that have bad credit. We’ll determine your eligibility and help you begin building back your credit through a positive payment processing history. 

Bad Credit Woes

Starting a business always involves risk, as well as reward. Entrepreneurs know not to be afraid of failure, as it is just a chance to learn something new and improve for the next time.

Although you may have had a valuable learning experience, the consequences of poor credit remain. This doesn’t mean you need to be permanently scarred though. There are many reasons a business owner may have a history of bad credit, and some of them may not even be their fault. These include:

Irresponsible Financial Partners

Did you hitch your horse to the wrong wagon? A business partner who isn’t on the same page as you can, unfortunately, cause a lot of problems. If you’ve had a financially irresponsible business partner, they can taint your credit history as well as your own. 

Whether they lied, stole money, or just misused funds, this can be enough to take down your business and your finances as well. 

Missed or Late Payments

There is a lot to stay on top of as a business owner, and sometimes payments can get missed or delayed. 

Whether it’s as simple as losing a statement in the mail or having to move around funds to pay bills, late payments happen. Unfortunately, this little mistake can have serious consequences on your credit. 

Owing More Than What You Generate

You had a great business idea and sunk all your funds into it. Then you went out and procured loans to make sure your business was a success. Unfortunately business did not take off as quickly as you anticipated. Or maybe you misread the market, or there was a recession, etc., etc. 

Businesses fail all the time, even when they have a good business idea and a sound business model. If you owe more to lenders than what your business is generating it can contribute to poor credit. 

You may need more time to make your business profitable, or you may need to change business models. Either way, it doesn’t have to be the end.

Bankruptcy

In the worst-case scenario, you may have had to declare bankruptcy due to a failing business or other reasons. 

Declaring bankruptcy stays on your credit history for seven to ten years. It is not a permanent mark on your credit history, and it is not a permanent reason to call it quits.

Having declared bankruptcy puts you in the same category as successful people such as famous author Mark Twain, creative genius Walt Disney, and financial advisor Dave Ramsey.

Sometimes declaring bankruptcy is the smartest thing you can do and can give you a fresh start. 

A Fresh Start

Do you ever wish you had a chance to explain yourself? Do you feel as though if someone listened to you, they would understand your situation and offer a second chance? 

This is your chance. Easy Pay Direct has worked with many business owners with poor or non-existent credit, and they will work with you too. 

If you’ve been hit with bad credit, it could be for many reasons. Perhaps you miscalculated the popularity of your business or tried to expand too soon. Perhaps you worked with a business partner who mismanaged finances. Whatever it may be, you have the chance to learn from your mistakes and start over.

Tips on Repairing Poor Credit

Do not feel like your situation is hopeless. There is a lot you can do to get your credit back on track. Here are some suggestions:

Pay Off Debt

If you can pay off any of the debt you owe now, do so. 

There are two methods of paying off debt. One is known as the avalanche method and that involves starting with the loans with the highest interest rate first. 

Another method is known as the snowball method and this involves paying off loans of the smallest amount first. This can provide some quick and easy wins to get your credit in a better place fast. 

Depending on the state of your loans, loan consolidation may also be a good choice. Analyze your options and choose the one that will start improving your credit the fastest.

Put your Current Payments on AutoPay

One of the worst things you can do to hurt your credit is to miss a payment. To avoid any more late or missed payments, consider putting every payment plan you have on autopay. This ensures payment goes out on time. All you have to do is make sure there’s enough money in your account to make the payments.

Continue Using Credit

It may be tempting to cut up credit cards when you’re in debt. However, if your goal is to improve credit, you have to use credit to do so. Your credit score is improved by using credit and then paying it off promptly.

To do this, continue putting small amounts on your credit card and paying them off every month. This will put a good history on your report to outweigh the negative history.

Check Your Credit Report for Errors

It’s possible your credit report is being dragged down by errors. Request a copy of your credit report and ensure that it is accurate. Look for false charges or other instances of fraud. Report any false claims (with proof to back them up). When the errors are removed your credit history will improve.

Before You Apply

Companies like Easy Pay Direct are happy to help business owners with bad credit find a merchant account provider that will work for them.

For best results, make sure you are prepared before you apply. 

  1. Take the steps above to begin repairing your credit.
  2. Make sure you have an explanation for why your credit was bad in the first place. Get all of the supporting documents you need for proof.
  3. Have financial statements ready about the past and current state of your business. If finances are less than ideal, also come with a plan for how they will improve.
  4. Ensure your business is up to date on all licenses and legal requirements.
  5. Have all the basic information you need for the application ready like your tax ID number. 

Having all the above information at the ready will ensure your application process is smooth and that Easy Pay Direct can get you set up with the best option for you.

Final Thoughts

Whether you’re switching merchant accounts or starting a new business from scratch, bad credit is no reason to despair. Some merchant account providers will not want to work with someone with poor credit as it puts you in a higher risk category.

However, there are plenty of established merchant account providers that will work with you to both improve your credit and put your business in a place to succeed. 

The right merchant account provider will not only handle all of your credit card processing and transactions, but improve security, reduce instances of fraud and chargebacks, and help your business grow and thrive.

Easy Pay Direct can help you find your bad credit merchant account. Call or click today to get started!

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