Getting a Merchant Account if You Have Bad Credit

Bad credit can be a substantial hurdle to overcome when shopping for a merchant account. Of course, there are ways around this problem that will make it possible for those with bed credit to get a merchant account.

Most people don't understand why personal credit is a factor when applying for a merchant account. The truth of the matter is that bad credit is weighted heavily by providers when they determine whether to approve or decline your application for processing. If your personal credit is bad, it may still be possible to acquire a merchant account by considering a few of the options below.

Co-signor
By having a business partner or relative with good credit sign the personal guarantee section of the merchant processing agreement (MPA), you will bypass the problem all-together. Your name will still be on the application as the business principal, but the good credit of your co-signor will be considered by the provider for approval.

Note: Some providers may not accept a co-signor on a merchant account application for a sole-proprietorship. A provider may require that a co-signor for an LLC or a corporation be listed on the articles of incorporation as an officer of the company.

ACH Delay - Agreeing to let the provider put an ACH delay on your merchant account will lessen the risk factor associated with your account. The lower risk factor of an ACH delay may allow the provider to approve your account regardless of bad personal credit.

Rolling Reserve - A rolling reserve is similar to an ACH delay in the way that is lessens the risk factor of an otherwise unacceptable merchant account. If you have bad credit you may still be able to get a merchant account if you agree to let the provider impose a rolling reserve on your account.