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Credit

May 21, 2006

Q: I am a small merchant/vendor and my point of sale is limited to cash/checks & money orders due to the fact that I have a bad personal account with my former banking institution. I wish to now accept credit cards, so my question is, are there any other routes to accepting credit cards from consumers?

A good credit history is an important commodity for every entrepreneur. You must have good credit to purchase supplies from vendors, finance debt, raise money, and accept credit cards.

People sometimes underestimate the importance of credit. Just about every person doing business with you is going to run a credit check. In many ways, a credit check is like a character test because your ability and willingness to pay people you owe is a testament to whether or not you live up to your agreements.

Improving a marginal credit history is so important since it frequently determines how much you can borrow and how much interest you will pay.

I have seen far too many entrepreneurs who, when they find themselves shy of cash, refuse to pay certain vendors, which destroys their credit. If you owe some money, try to pay a small amount every month; a creditor views this as a signal of your intention to pay what you owe. If you pay nothing on the account, the creditor will not only stop doing business with you, it will report your failure to the credit bureau and your credit score will sink even lower.

To begin improving your situation, obtain a credit report either on-line or from your financial institution. Review the report to discover the credit blemishes. You may discover some wrong information. If you do, contact the creditor and ask them to fix the error.

You also need to pay down your debt and you need to pay your bills on time. The more you do this, the better your credit will be.

In order to accept credit cards from customers you need to have an active checking account. If you do not have one or can't get a checking account, it could be because you have been reported to Check Systems. Most banks use this reporting group to find out if a person has been overdrawn, had charge offs, etc. The bank denying you a new account can give you this information and then you can contact the reporting bank to clear up the problem.

Accepting credit card transactions is not a luxury; it’s a necessity. But you need to have good credit to do so. So, if your credit is weak, it’s time to work on getting it stronger.