Bad Credit Merchant Account

A bad credit merchant account is used when your personal credit does not fall within the underwriting guidelines set by the financial institution providing the account. Believe it or not, your “personal” credit score is one of the most important factors in the approval process, simply because underwriting for a merchant account does not rely on D&B business credit. It is not impossible to obtain an account with a history of bad credit, but you may pay more in service fees compared to someone with a stronger credit profile, or the processing bank may need to establish a “reserve” to offset the risk of taking a loss on your account.

Bad Credit Merchant Account


You run into problems with bad credit if you are behind on payments to your credit accounts, you have defaulted on loans, you or your business has declared bankruptcy, or you have or had in the past judgments and liens in place against the business or yourself personally. All of these factors can decrease your credit rating. You may not have to go after a bad credit merchant account with one or two bad marks on your credit report, but it depends on the specific bank or financial institution that you’re using.

Cosigning and other options exist in order to open such an account. However, this does require asking another person to shoulder the risk, should you have an issue with the merchant account down the road (excessive chargebacks, unpaid fees, and more).

Another option is to apply as a bad credit merchant with a smaller monthly volume, which represents less overall risk to the merchant account provider, and then over time you can grow the account limits.

The high-risk merchant account category is a category that includes businesses with a bad credit history. You don’t need to worry about standing out from other businesses simply due to using a high-risk merchant account, as these types of merchant accounts are prevalent among several specific industries and your customers will never know that you have financial troublesor the approval conditions between you and the financial institution.

Such an account may not be your first choice, but if you’re trying to recover from financial problems, it could be a lifesaver. The service fees and terms may not be as good as a typical merchant account, but the bad credit merchant providers are willing to take a risk on your business that other processors may not touch at all.

Once you have established a history with the processing bank and solidified your finances, overcoming your difficult financial status you may be able to apply for an account with better terms elsewhere; however, ask the bank that initially approved you if they can review and improve the merchant account’s terms first. Because the bank was able to get you approved in the first place, it’s only fair turn to allow them an opportunity to keep your business after they stuck their neck out for you when no one else would.

Talk to the merchant account provider about your credit history before you apply in order to avoid being denied. Some merchant account providers will not work with a high-risk or a bad credit merchant, and you don’t want to waste your time simply to end up with no merchant account at all. Also, each time that you apply for a merchant account, an inquiry is lodged against your personal credit, which further reduces your credit score! The companies may have a specific high-risk department that handles high-risk accounts that you can speak with to determine your eligibility prior to applying for the account, or better yet, speak with an experienced account manager at Durango Merchant Services today!

By determining your status as a bad credit merchant, you can join forces with Durango Merchant Services, who specializes in cases such as yours, and thereby tackle the financial dilemma your business is in. Our financial support services can be the support you need as you work toward improving your credit score as well as providing the crucial services your business requires to operate. If you are unable to offer your customers the ability to process credit cards, your business will soon suffer and fail. Durango Merchant Services understands the extreme importance surrounding this issue and works with bad credit merchant accounts on a daily basis, providing reliable services and peace of mind so that your business can keep operating seamlessly. Contact our experts today to discuss your specific situation and start your recovery process.


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By | 2017-12-31T11:56:18+00:00 February 6th, 2012|Categories: Bad Credit, Hard to Place, High Risk, Merchant Accounts, Reserve|0 Comments