So you have a fantastic business idea, and youāre eager to start building your company. But thereās just one problem: you have a poor credit score. This could cause roadblocks in your startup process.
One of the essential steps to starting a business is opening a business bank account. You might be wondering how you would open a business bank account with bad credit.
Weāre here with some tips on how to open a business bank account, even if youāre struggling with credit.
What is bad credit?
A bad credit score in Singapore is a four-digit score based on your payment history. This score indicates the risk of you defaulting on your loan payments. The scoreboard ranges from 1,000-2,000. According to Credit Bureau Singapore, a score from 1,000 to 1,723 is considered a bad credit score.
If youāre unsure if you have a bad credit rating, head over to Credit Bureau Singapore to obtain your credit history report.
Here are a few factors that can affect your credit rating:
- Number of credit cards youāve applied for
- Frequency of late payments
- Number of enquiries to your credit score
Three tips on opening a business bank account with bad credit
1. Improve your personal credit
One way to open a business bank account with bad credit, is to take the time to work on your credit score. If opening a business is still in the pipeline, take the lead-up to your launch to work on your credit.
You can do so by:
- Avoiding taking any more loans, or loans in quick succession
- Try to pay off existing debt by meeting short-term repayments
- Limit number of open credit lines
2. Forming an LLC
If you have a bad credit score , forming an LLC might be a way to circumvent that. Forming an LLC or a similar entity provides you with a tax identification number. This basically identifies your business as a tax-paying āindividualā.
You can then use your LLC to open a business bank account. This is also a great way to separate business finances from personal finances.
3. Open a business bank account with no credit check
Alternatively, you could open a business bank account that doesn't require a credit check. However, do note that these providers will still require business documents from you, proving the legitimacy of your company.
Also, some of these business bank accounts might have higher administrative and monthly fees.
Where can I find such business accounts?
Opening a business account with Aspire is easy, fast, and transparent.
The Aspire Business Account has no monthly fees, minimum deposits, or hidden fees. This allows you to have more flexibility over your business finances.
Youāll also have access to the Aspire Line of Credit. Get up to S$300k in less than 48 hours, and stay in control of your loan boundaries.
Intrigued? Find out more about what Aspire has to offer here.
Frequently Asked Questions
