Merchants who have bad credit are viewed as riskier borrowers by small business loan providers. Creditors who lend money to bad credit merchants usually shy away from these borrowers since they aren’t sure high risk merchants won’t miss their payments or default.
The Fair Isaac Corporation (FICO) calculates credit scores and provides the famous FICO score. The Corporation uses information from the 3 credit bureaus, Experian, TransUnion, and Equifax, and calculates the score. Be aware, your bad credit can cause a number of problems such as higher interest rates.
According to FICO:
- Maxed-out card costs 10 – 30 points for those with a 680 FICO score, and 25 – 45 points for those with a 780
- 30-days-late payment costs 60 – 80 points, and 90- 110 points
- Debt settlement costs 45 – 65 points, and 105 – 125 points
- Foreclosure costs 85 – 105 points, and 140 – 160 points
- Bankruptcy costs 130 – 150 points, and 220 – 240 points
FICO scores are between 300 and 850:
- Borrowers with scores at or below 579 have “bad credit.” Experian reports 61% of borrowers with these scores usually default or become seriously delinquent on their loans in the future.
- Those with 580 – 669 are labeled as “fair.” Only 28% of these borrowers usually become seriously delinquent on loans. However, even this type of borrowers can face high interest rates or have a hard time securing loans.
How to Get Small Business Loans with Bad Credit?
Getting approved for a small business loan with bad credit can be an uphill battle. A high risk kind involves greater volumes of sales with very high vulnerability to fraud. Banks and other traditional lenders aren’t willing to work with high risk merchants and avoid giving money to borrowers who may not be able to pay it back.
That’s where reputable alternative online lenders like First American Merchant come into play. FAM is an award-winning high risk business funding provider and payment processor that has an A+ rating with the BBB and is unmatched in the industry in terms of business funding opportunities, including a bad credit merchant cash advance.
If you’re tired of lenders saying “No” due to your bad credit history, with firstamericanmerchant.com, you can easily get approved for the type of small business funding that best suits your business needs. First American Merchant understands how frustrating obtaining high risk business financing can be and has dedicated itself to making business funding options available to merchants of all types.
FAM has helped thousand of hard-to-approve merchants get the best for their business needs: FAM’s approval rate is at 99%. Even bankruptcies aren’t a problem for firstamericanmerchant.com.