How to Get a Business Bank Account with Bad Credit

As an individual with a poor credit history you’ve probably faced a number of knockbacks when applying for a business bank account from lenders. The good news is that it’s possible to open a business bank account with poor credit. Let’s examine the options.

Nic Redfern Last updated on 30 November 2020.
How to Get a Business Bank Account with Bad Credit

Millions of people around the country are set back by bad credit. But, there’s no need to let bad credit tarnish your business prospects forever. Whether your credit history has been adversely affected by the decisions of others which you cannot help, or by your own past financial mismanagement, there’s no reason why you can’t start your own successful business.

Bad credit can have a harsh impact on your finances. It can make it hard to apply for any form of credit be it loans, mortgages or forms of short term financing. But, even if your credit history includes bankruptcy or a county court judgement, it is still possible to open a business bank account and bring your finances back under your control.

How to open a business bank account with bad credit

Opening a business bank account is subject to a credit check. This is where your first stumbling block might be if you’re attempting to open a business bank account with bad credit.

A credit check is the process by which a potential lender looks at your borrowing history in your credit report, which lays out your creditworthiness to potential lenders. This helps them determine the level of risk in lending to you.

There are specific business bank accounts with no credit checks targeted at individuals with bad credit.

No credit check business bank accounts often offer similar services to regular business bank accounts, although they may not offer overdrafts.

Here are some of the services commonly offered by no credit check business bank accounts:

  • Receive payments
  • Pay invoices
  • Make cash withdrawals and bank transfers
  • Set up direct debits and standing orders
  • Make payments with a card
  • Access online and app banking
  • Access online accounting tools

Often those with bad credit looking to open a business bank account will choose a different provider to their regular bank. However your bank may allow you to open a business bank account with them, and it is worth pursuing if you value their services.

Before you look at our business bank account deals or business accounts without a credit check, it’s worth determining whether you need a business bank account for your enterprise. As a sole trader it’s not a legal obligation for you to open a business account, although there are many advantages for doing so if you do decide to open an account, follow our guide to opening your first business bank account.

Challenger banks are more open to those with a bad credit history

It’s well known that challenger banks have changed the way we bank, but not everyone knows that there’s been somewhat of a challenger bank commercial banking revolution too. Challenger banks have risen since the financial crisis to offer an alternative, often to small businesses who are looking for business bank accounts for their day to day banking needs.

Challenger banks are more open to innovative and non-traditional businesses, and also offer a greater level of choice to business owners, even those with a bad credit history.

Online challenger banks usually offer quick application processes and accounts can often be open in just minutes, so there’s less time waiting around to learn if your application will be approved. This is often a bugbear of small business owners looking to open a business bank account.

In the unlikely event you should fail to be approved, you can try your luck with one of the many other challenger banks offering business banking solutions.

How to improve your credit rating

If you still wish to apply for a traditional business account, it’s worth spending time on improving your credit score first, before inviting banks to review your credit score.

We have a complete guide to fixing your credit score onsite, below are just two of the most important actions you can take.

Request a credit report

You might be aware your credit score is poor, but until you fully examine your credit report you won’t know exactly what is negatively impacting it and affecting your ability to register for a business bank account.

Credit agencies can supply you with insights into what is bringing your credit score down, this will give you areas to actively address when looking to improve your score.

Pay invoices on time

If you are using your personal account for business uses ensure you maintain good business practices, like paying new invoices on time, as this shows you can pay your suppliers and partners. This will show lenders that you are reliable and make them more willing to do business with you.

How to compare bad credit business bank accounts

At NerdWallet we offer unbiased no credit check business bank account comparison tables. Here you can see the current deals available and compare each provider on the features and benefits of their product.

Compare business bank accounts now on monthly fees, overdraft facilities and transaction fees to find the right account for your business and leave your poor credit history in the past.

About the author:

Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more

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