Credit Card Application Strategy: Applying for Business Credit Cards

Currently there is an improved bonus on the Ink Bold and Ink Plus cards (two of the best cards out there), which reminded me that I meant to write a post on applying for business cards like…a year ago. Applying for business credit cards is an important part of a diversified miles strategy. Eventually, you’re going to get to a point where you’ve pretty much run out of personal cards to apply for. American Express and Chase both only allow one sign up bonus per lifetime these days, further limiting thing. But applying for business cards opens up your card pool with just a little bit of work – both on the credit card side and for your personal business!

Do I have to have a personal business to apply?

The short answer to this question in my mind is yes, although it’s a bit more nuanced than that. Generally I wouldn’t recommend lying and saying you have a business when you don’t have one. Still, odds are you probably have a business even if you don’t think you do. My friend has a tumblr where he does brief one paragraph beer reviews – that’d qualify as a business if he tried to monetize it. And business credit cards aren’t for successful businesses, they’re just for businesses, so you could make a mere pittance (like this blog!) and still qualify.

Here are some examples of personal businesses, mostly from friends, that legitimately qualify as small businesses:

– blogs (like this one, where I try to make a little bit of money from my hobby)

– buying and selling of items on EBay: this is a big one, but I have friends who buy and sell basketball cards, electronics, wine, etc. This is a legitimate business and I think it’s a good idea to separate your business and personal expenses for something like this (aside from just getting a card for the bonus)

– buying and selling of virtual items online, like in World of Warcraft of something nerdy like that

– owning and managing rental property

So I have a small business. How do I apply?

There are only some slight differences between business and personal credit card applications. The main difference is that they will ask you if you have a Tax Identification Number (TIN) for your business. You can get this from the IRS if you’d like, but I’d suggest just using your social security number – you can use this if you are a sole proprietor. You also need to indicate what type of business you are, in most cases, sole proprietor is the way to go (that basically just means you own and operate the business more or less alone).

Aside from that, there will be the regular personal questions – how much you make, etc., because ultimately you are on the hook for any charges you make, so they need to look at whether you personally are credit worthy. Which you are because if you are doing this right you’ve been paying your balances off every month, so there should be no worries there.

How does this affect my personal credit score?

Applying for a small business credit card affects your personal credit score a little differently than personal cards. You still will get the small ding of a credit check (since they check whether you are credit worthy), but you do NOT get the benefit of having a lower credit utilization ratio or longer average age of accounts. Once a business credit line is opened it affects the credit of the business, not the individual who opened it. So that is a small loss, though one I think is worth it. If you need a refresher on how all this stuff affects your credit score, click.

What do I do if my application is pending?

As always, I recommend calling the reconsideration line. Calling business reconsideration is slightly different though. Here’s a list of questions you probably should be prepared to answer, with some of my personal answers as an example:

– Nature of business (travel blog)

– Years in operation (1.5)

– # of employees (1)

– Revenue from last year (gross, not net, so you don’t report profits you just report cash flow in, my answer: “not much”)

– Expected revenue this year (1 million dollars, just kidding be serious)

– What you are looking to use the credit for (business expenses, advertising, etc.)

Final Thoughts

Business credit cards are a must have for any serious points enthusiast. The reality is, the odds are you probably own and operate a small business, you just don’t know it. Or, if you’ve always been interested in monetizing a hobby, why not try and grab a new credit card or two in the process? If you live in the United States, starting a small business is no big deal. Remember, it doesn’t have to be successful, it just has to be a business. Good luck and happy point hunting!

More Posts in this series