Why Do I Have Problems Getting a Merchant Account?

A merchant account is extremely important to small business owners.

Taking payments from customers and clients is nearly impossible without one, unless the small business owner if prepared to take only cash. Bad credit can prevent owners from opening bank accounts, securing a credit card, and more. You'll want to find the best way to take payments from your clients and having a merchant account is the easiest way to process them.

Bad credit can come from a number of past issues.

Unpaid medical bills, late payments due to unemployment or illness, or divorce. No matter where the issues come from it's no secret that bad credit impacts a small business owner harshly. There are steps a business owner with bad credit can take to solve the problems.

First of all work on paying down debt. Even small payments will help reduce debt and begin to repair a credit score. It will take time to pay down debt but this is a simple way to improve the score and prove to lenders that you are responsible.

Another way to improve a credit score is to dispute errors on your credit report. Be sure to only dispute items that are errors.

Once investigated if the entry is a true error the credit reporting company will remove it. This improves the credit score. Be wary of credit repair scams, these can be shady if not outright illegal.

All of the credit improvement methods can take months or even longer. While waiting for your credit to improve look for companies that provide merchant accounts to small business owners with bad credit. Most companies will have higher fees for high risk accounts, which is what accounts for people with bad credit are labeled. Some companies exist that do not do credit checks, such as PayPal. Almost anyone can open a merchant account with PayPal. There are fees but these are not as high as companies that offer them exclusively to people with bad credit. 

Never Overlook Importance of Research

Of utmost importance, research the companies before you choose one.

Just because a company offers merchant accounts to people with bad credit doesn't mean they are right for you. Every company will offer something different. Check the fees, transaction rates, and/or monthly deposit rates. Some companies offer debit cards while others have limits on the amount of business you can do with each package offered.

Calling the companies can give you a better idea of how each works. Create a list of the ones that seem to fit your needs, then contact customer service. You may be able to find a better deal and learn about new advances that have not been added to the information on their website.

Remember that most payment gateways or mobile payment processing companies work similar to traditional merchant accounts.

All of the mobile processing platforms give you a way to accept payments directly into your online account and then withdrawn to your bank account. These may replace the old merchant accounts and make credit checks obsolete.