How to Get a Merchant Account with Bad Credit

How to Get a Merchant Account with Bad Credit

Did you know that, according to FICO, the average American Credit Score is 695? That is considered a fair score, and with that, an average American can get a car loan or mortgage without any problems. This score becomes even more critical when you consider getting a merchant account or starting your own business. Credit scores under 600 mean that you have bad credit and will likely have issues getting lower interest loans or even a merchant account. You may be wondering if you can qualify for a merchant account with bad credit, especially a high risk merchant account.

What Does a Credit Score Mean for a Merchant

Merchant Credit Score  

A credit score is considered the financial stability of a person or a merchant. While there is no defined formula for calculating this score, as that information is kept top secret by the Federal Trade Commission, it is largely assumed that credit history, credit type, outstanding debt, etc. are the primary influencers. A basic idea of a credit score would look something like this (as shown on FICO):

  • 35% = payment history
  • 30% = amounts owed
  • 15% = length of credit history
  • 10% = new credit
  • 10% = kinds of credit 

A credit score usually ranges from 300 – 950 but is calculated differently by credit associations. In any case, the higher a merchant score, the lower the credit risk and the more likely that an acquiring bank and payment processor will work with them.

If you are still wondering what a credit score means for a merchant, the answer is clear. It is a way for a business to prove that it can handle its finances, avoid chargebacks, or know how to deal with them and have the resources to cover all the expenses. Your credit score shows the acquiring bank and your payment processor that you can be trusted.

Can You Get A Merchant Account with No Credit Check

Merchant Account No Credit Check  

At this point, you may be wondering, is it possible to get a merchant account without a credit check? The answer is yes. Sometimes it is possible to negotiate with a payment provider and agree that you will have a reserve of funds that can cover any potential problems or risky situations that occur with the business. If you and your payment processor agree to this, they might agree to avoid looking at your credit score.

Another way is to find a high risk merchant account provider or a payment processor that deals with high risk merchant accounts. They are more lenient with credit scores and are likely to accept merchants with lower credit scores than usual. While there may be some restrictions at first from your payment provider, once you build up trust, these will loosen up, especially with higher processing volumes.

How to Get A Merchant Account with Bad Credit

Merchant Account Bad Credit  

If you’re not ready to take the risks of looking for a payment processor that will not check out your credit score, but you do find out you have bad credit, there is a way to deal with this as well. While you improve your score, you can still apply for a merchant account and ask for a second chance from a payment processor.

Having this in mind means understanding that for a payment processor to take a risk on you, you will have to agree to adjust some terms and settle with some higher rates. Some of the typical restrictions or adjustments that a merchant account with bad credit might have to make include:

  • Volumes – As a merchant, you may have the hopes of operating with high volumes. But, if you have a bad credit score, the beginning requirements may include lowering your sales volumes. Do not worry, though; many payment processors will increase this limit if they notice that they can trust you.
  • Reserves – As mentioned, to convince the payment processor they can trust you, they may entail you having a funding reserve that can cover any losses that might occur when the business starts operating. These may be required for a more extended period if a merchant has a bad credit score.
  • Higher Rates – Rates of processing or processing fees are higher for riskier merchants and merchants with low credit scores. It may be for a short period until the payment processor sees that they can trust you, or as a constant.  


If it is impossible to get a merchant account with bad credit, it just takes a little more effort. It is all about finding the right payment processor, usually a high risk payment processor, who is ready to place their trust in you. In the meantime, you can always work on your credit score and build up your relationship with your customers and payment providers. Do not let a bad credit score stop you from starting your business or creating a high risk merchant account.