Merchant Account With Bad Credit
Is your credit card history insufficient to qualify for a merchant account? If yes, then
you should look for a bad credit merchant account. The reason for opting for this type of merchant account is that many merchant account service providers don’t provide a merchant account to those with poor credit histories, as it is deemed "high credit risk."
These merchant account providers only work with merchants who have a good credit history or are "low-risk.”. As a result, the majority of banks and merchant account service providers reject these kinds of merchants with poor credit histories.
In this article, we will guide you on how to obtain a merchant account with bad credit and what factors you should consider before opting for one.
Bad Credit Merchant Account: What Is It?
It is a merchant account through which a business can process credit card payments even if its credit history is poor. These types of merchant accounts are provided by the service providers who specialize in serving businesses with “high-risk” or low credit histories.
Is this Account Necessary?
The need for a bad credit merchant account is contingent upon the following factors:
- Bankruptcy: If you have filed a Bankruptcy either in a previous business or personally, then you will be classified in the bad credit category. Therefore, you will be considered a high-risk merchant who will need to opt for this type of account.
- Low Credit Score: If you are a first-time business owner, then having a FICO score of less than 580 will place you in the bad credit category. Thus, you need to apply for this type of account.
- Outstanding Liens And Judgments: If you owe tax liens on your property or have unpaid judgments issued by a court, it will impact your credit score negatively, and you will be classified in the bad credit category. In this situation, you need to apply for such type of account.
Application Requirements
The procedure for applying for a merchant account with a poor credit history closely mirrors that of traditional merchant accounts. However, it may need the following additional documents and resources to apply for this type of account:
- Processing Statements: Through processing statements, the service provider may identify and assess your credit card processing history and your chargeback ratio (which should be lower than 2%). Nevertheless, if you are a novice in the business realm, you won't possess these required documents
- Bank Statements: You should provide bank statements of up to 6 months, which will reveal the financial strength of your business.
- Other Information: Your merchant account provider may also obtain some additional information related to your business to complete the process.
How To Open An Account?
Are you considering starting a new business? Or are you looking for a merchant account for an existing one? You are in the right place! At Poslinksolution, we offer credit card processing options even to businesses that have a low credit score. We are specialist in payment processing solutions for e-commerce and other businesses that are generally high-risk businesses.
Poslinksolution distinguishes itself by providing transparent and equitable pricing to its customers. This article comprehensively covers all aspects related to merchant accounts with poor credit. If you are considering applying for one, you can get your bad credit merchant account here:
Selecting Best Service Provider
To choose the best service provider, you should consider the following factors:
- Partnership With High-Risk Merchants: Your service provider should work with “high-risk merchants.” If they are working with “low-risk merchants,” reconsider your merchant account provider. Practically, many service providers work with high-risk merchants so that you can pick the right service provider for you.
- Transparent Pricing: What fees is your service provider charging for processing payments, CNP transactions, and chargebacks? Are there any hidden fees or unreasonably high processing rates? If yes, then you should not be partnering with them. Only work with a provider with transparent credit card processing fees.
- Reserves And Volume Restrictions: Are there any limitations on the merchant account that you are applying for? Is your payment processing limited? Does your account provider require a reserve of funds as a deposit? You should ask your merchant account provider these questions before making any commitment, as it may have a serious effect on your business.
Approval For Account
The following are the factors that affect approval for the account:
- Business Type And Industry: Businesses that are in high-risk industries are likely to face more chargebacks, which may influence the approval decision.
- Processing History: You should have a consistent track record of credit card transactions. This may influence the approval decision for your account.
- Financial Health: If the overall financial health of your business is in good condition, then it may impact the approval decision positively.
- Personal Credit History: Your personal credit history should reveal that you are a credit-worthy person; it will impact the decision positively.
Factors You Should Consider
Before going for bad-credit merchant accounts, you should consider the following factors:
- Fees: These accounts have a high processing fee. You should consider this before going for this type of account
- Customer Support: You should also look for the customer support of your account provider, as you may encounter some issues due to a low credit history. Your provider must resolve those issues timely and professionally
- Restrictions And Limitations: Look out for any restrictions imposed on processing volumes and transaction limits.You should clarify the terms and conditions for these limits with your account provider before opting for an account.
- Personal Credit History: Your personal credit history should reveal that you are a credit-worthy person; it will impact the decision positively.
- Reviews And Feedback: You can obtain reviews and feedback from other businesses that have used the services of your potential merchant account provider so that you can make a wise decision.
Conclusion
Overall, if you have a low credit history to open a merchant account, you can opt for a bad credit merchant account. But before opting for such an account, you should consider your prior bankruptcy, low credit scores, and outstanding liens and judgments. You may require bank and processing statements and additional information to apply for this account. You can open a merchant account with bad credit with Poslinksolution, we offer credit card processing options even to those businesses that have a low credit score. But before making your decision, you should consider some factors, such as transparent pricing and volume restrictions.
The approval of your account may depend on the type of your business and industry, processing history, financial health, and personal credit history. You may also consider fees, customer support, limitations, restrictions, and feedback before opting for a merchant account with bad credit.
Thanks for stopping by. We hope we have covered all the necessary information in the article so that you can make an informed decision.
William Harrison
William is a consultant providing expertise in business management. He has successfully integrated POS systems into various businesses, demonstrating a passion for improving processes and offering financial advice. With a decade of experience in dealing with POS systems, payment gateways, and ATMs, he is also a passionate writer about finance and accounting.
