Archive for November 2017

How to Obtain a Bad Credit Merchant Account

If you’re a bad credit merchant, you’ll be included in the category of high risk merchants. Bad business credit or poor personal credit scores can cause problems when trying to get approved for a merchant account.

The truth is that many merchant services providers aren’t willing to take on merchants with bad credit because of higher chargeback rates and fraud associated with their businesses. However, this doesn’t mean you can’t get a merchant account for your bad credit business.

It’s interesting to note that the credit scores of Americans usually fluctuate over time, and different scoring systems show a bit different results. According to FICO, one of three credit bureaus,the scores range from 300 to 850 points. The average FICO score was 699 as of July 2016, which was up from 696 in October 2015 and 695 in April 2015.

Most credit checks have the following components:

  • Business credit history
  • Personal credit history

 The decision will be based on:

  • Number of defaults
  • Frequency of defaults
  • How far back defaults extend
  • Amount owed
  • Whether debts have been settled

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

When turning to a merchant account processor for a bad credit merchant account, you should take into account the following points:


Bankruptcies can stay on your credit report for 10 years and make many processors stay away from you. Find a merchant account provider for which bankruptcies aren’t a problem at all.

 Business Structure

If you’re aLimited Liability Company or a C-corporation with an employer identification number, merchant account processors may focus on the business credit and not your personal credit. Contact the IRS (Internal Revenue Service) for an employer identification number as your potential credit card processor may require it.

  • Co-Signor

Consider gettinga co-signer who has good credit.He/she will be responsible for unpaid chargebacks or fees on your merchant account.

 Credit and Discount Rate

Your credit can affect the discount rate you’ll be required for credit card processing. Bad credit may result in a higher discount rate.

  • High Risk Business or Not

Ifyou own ahigh riskbusiness, your credit report may be scrutinized more than that of a low-risk business owner.You’re likely to be charged higher fees.

  • Lower Monthly Volume

Consider applying for lower monthly volume. If your account proves to be problem free, your merchant account provider will allow you to increase the monthly volume.

  • Offer an ACH Delay

An ACH delay means a delay in the deposit of processing funds to your bank account. The merchant account providerwill withhold your funds for a few extra days as a guarantee that all of your transactions are legitimate.

  • Offer a Rolling Reserve

Consider leaving a “reserve” of funds with your processor for a while just to cover it in case you default. This will only work if you can afford it.

  • Overseas Payment Processors

Overseas merchant processors are a good option for bad credit and high risk businesses. You’re likely to be charged higher startup fees and discount rates.

  • Payment Processor Specializing in the Field

With the true professional in the field, you can get the best for your business needs. Reputable processors in the high risk sector don’t feel hesitant to provide a bad credit merchant account for merchants with low credit scores, bankruptcies, or work with those who need no credit check merchant accounts.

Bad credit doesn’t mean the end of the world. There are respectable credit card processors that specialize in bad credit merchant services and do their best to help you take your business to new heights without challenges.

Author Bio: Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No.1 bad credit merchant accountcompany, serving both traditional and high-risk merchants.

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