credit application letter for business

A Guide to Credit Applications for Business Owners

A guide to credit applications for business owners that includes what lenders ask for, what to do if you are denied, and how these impact your credit score. Learn more now.

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rowing your business requires capital. While you can rely on self-funding to get your organization started, at some point, you'll likely need financing to purchase equipment, hire new staff, or build up inventory. When that time comes, you might decide to apply for business credit.

Various funding options are available for growing organizations, including loans and credit cards. To access them, you must complete a credit application for business with your chosen financial institution. The credit application details information about you and your company, which the lender will review when deciding to approve or deny credit.

What is a business credit application?

A credit application for a business account is a form used to initiate a request for financing from a financial institution. It's one tool that lenders use to evaluate a company's fitness for financing.

Completing a credit application form for business financing tells the bank you need money to support your company's operations. Typically, the application asks for key details about you and the business, such as contact information, industry sector, and how much money you want to borrow. The lender will use the details you provide to pull a business credit report and possibly a personal one, depending on your company's entity type.

Some lenders allow you to submit an online application, but you can also schedule an appointment at a local banking branch if you prefer one-on-one assistance. Typically, you'll receive a credit decision within a few business days — and sometimes even immediately, depending on the financial institution.

Depending on the lender's policies, loan type, and amount borrowed, you may need to submit additional information to support your business credit application. Examples of additional information a lender may request include your business plan, recent financial statements, tax returns, and financial forecasts.

If you receive approval for your loan, you'll get access to your new funds quickly via a designated bank account or a business credit card. However, if the financial institution denies funding, it will explain why in a written letter you'll receive after their evaluation.

What do lenders ask for in a business credit application?

Credit applications for businesses aren't standardized, so the questions you encounter will vary from lender to lender. The extent of the application will also differ based on the amount you apply for and the loan type. It stands to reason that the application process for a $5,000 vendor line of credit will likely be less complex than a request for $5 million to renovate your business office.

That said, here are a few questions you'll probably encounter when you apply for business credit.

Contact information

A lender will want to know the name of your company and where it's located. Identification details help them request business and personal credit reports, and it also tells them where to send the monthly bill if they approve your application.

Contact information you may provide includes:

• Business name
• Owner name and address
• Entity structure
• Employer identification number (EIN) or owner's Social Security number
• Business and personal phone number
• Email address

You likely know your company's basic details by heart, so providing them shouldn't be too hard.

Market sector and industry details

The lender will want to know what your business sells and what market sector you're in. Learning the basics about your company helps them understand why you need financing and how it will benefit your organization.

Expect questions about the length of time your company has been in business and your target customer base. A lender may also ask about vendor relationships, inventory (if you have any), and the number of employees you have.

Typically, details about your company operations and market sector are included in your business plan. The bank may request to review your business plan, so preparing it before starting a credit application is a good idea. Your business plan doesn't need to be the next great American novel—a few pages will usually suffice for a growing organization.

Trade references

Some lenders will include a field requesting the name and contact information of any suppliers or vendors your company does business with. If you have an existing relationship with a supplier—especially one that involves a credit line—including it in your credit application can demonstrate your company's ability to stay on top of payments.

Expect the financial institution to request the name of your suppliers, their address, a point of contact, and phone numbers. Keep in mind that not every vendor reports their client's payment history to credit reporting agencies, so the lender may need to reach out directly for a reference.

Company financial statements

A lender is unlikely to approve a request for credit if they don't believe your business can stay on top of payments. So, they'll want to review your company's financial statements to see how much revenue you earn and whether there's enough income to support ongoing debt repayments. They'll also evaluate your business's outstanding debt, such as loans and credit cards, to determine if the company is overextended.

Some lenders may request audited financial statements depending on the size and complexity of your loan request. Other financial institutions may be happy with statements a local accounting firm reviews. You may also need to provide financial projections and copies of your recent business tax returns.

How a lender uses a credit report and score in business loan applications

Once you finalize your application and submit all the required documents, the lender will start the evaluation process. It will ensure all the details in your application are accurate and may request additional details if necessary.

The lender will pull your business credit report (if there is one) and may request a copy of your personal credit report. A business credit report is similar to a consumer credit report. It will list identifying information about your company, as well as open and closed credit accounts for recent years and payment history.

Along with your credit report, the lender may check your business credit score. The credit score it uses may be the FICO Score model or a different scoring model of its choosing. Typically, the higher your company's credit score is, the more likely you'll receive an approval and the more favorable your credit terms will be.

A high credit score may result in an automatic approval with some lenders. If your application requires additional review, it will pass to the financial institution's underwriting team, who will perform a more detailed assessment. The underwriter's objective is to determine whether the risk of issuing a loan is worth the potential return to the lender. If the underwriter decides the loan is too risky, they may provide you with a lesser loan amount or deny the application altogether.

How to handle a business credit denial

A denial of business credit can be very frustrating. However, you may still be able to obtain a loan through another lender or apply for a different financing option that's more suitable for your organization.

Start by understanding the reasons for the denial. You'll likely receive a short letter stating basic reasons for the denial, such as a high debt-to-income ratio. If the rationale doesn't make sense to you, schedule an appointment with a lending specialist for clarification.

Next, address any issues that are problematic for lenders. For instance, if customers aren't paying you quickly enough to meet the lender's standards, tighten up your company's account receivable policies.

If a low credit score is the problem, take action to improve it. Learn the factors that impact your credit score, such as too much debt or missed payments, and correct them.

How applying for credit impacts your credit score

The short answer: It can.

Applying for a business loan or credit card may result in a hard pull of your credit report—regardless of whether the lender approves you. The hard pull may decrease your credit score by a few points. If your credit score falls into the average or poor credit bucket, those few points can make a difference in whether other lenders will approve you for a loan.

To minimize the impact of credit inquiries on your personal or business credit report, understand the lender's requirements before you submit an application. Ask them what they require for approval and what credit score typically qualifies for a loan. You can then ask the consumer or business credit reporting agency for a copy of your credit report and score to assess the likelihood of obtaining credit. If you don't meet the lender's general requirements, shop around to see what other credit products you might qualify for.

Novo can help with your small business financing needs

Obtaining funding for your business can help you expand, support current operations, or provide an extra cushion if needed. At Novo, we offer up to $75,000 in merchant cash advances with a simple 10-minute application process. Learn more about our financing opportunities , and start your application today!

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

The Merchant Cash Advance is provided by Novo Funding LLC, PO Box 311092, Miami, FL 33231. Novo is the marketing name for Novo Platform Inc. and its subsidiaries and affiliates. Novo Funding LLC is a wholly owned subsidiary of Novo Platform Inc. Credit and Merchant Cash Advance products and services are offered by Novo Funding LLC. The information and materials contained on this website - and the terms and conditions of the access to and use of such information and materials - are subject to change without notice. Not all products and services are available in all geographic areas. Your eligibility for particular products and services is subject to final Novo determination and acceptance.

Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.

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Sample Credit Request Letter To Supplier: Free & Effective

In this article, I’ll share a step-by-step guide on how to write a persuasive credit request letter, including tips from my personal experience and a customizable template to get you started.

Key Takeaways

• Understand the Purpose : Learn why and when to write a credit request letter to a supplier.
• Personal Experience Tips : Gain insights from real-life examples and personal advice.
• Step-by-Step Guide : Follow a detailed guide to craft your letter effectively.
• Customizable Template : Use a provided template to easily create your own letter.
• Engagement Request : Share your experiences and tips in the comments section.

Understanding the Purpose

A credit request letter to a supplier is a formal way of asking for payment terms that allow you to purchase goods or services now and pay for them later. 

This can help you manage your cash flow more effectively, especially if you’re dealing with seasonal fluctuations or waiting on receivables.

Step-by-Step Guide to Writing a Credit Request Letter

Step 1: prepare your information.

Before you start writing, gather all necessary information about your business and the supplier. This includes your business name, contact details, the history of your transactions, and any other relevant details.

Step 2: Start with a Professional Greeting

Address the letter to a specific person if possible. Use a formal salutation like “Dear [Name]” to start your letter on a professional note.

Step 3: Introduce Your Business and Intent

Begin with a brief introduction of your business and the purpose of your letter. Clearly state that you are requesting credit terms.

Step 4: Provide Justification

Explain why you are seeking credit terms. Be honest and transparent about your reasons, whether it’s for managing cash flow, expanding your business, or other reasons.

Step 5: Reference Past Transactions

If you have a history with the supplier, mention it. Highlight your timely payments and reliability to strengthen your request.

Step 6: Detail Your Request

Specify the credit terms you are seeking, such as the payment period or credit limit. Be realistic and fair in your request.

Step 7: Assure of Future Business

Emphasize your commitment to maintaining a long-term relationship with the supplier. Assure them of your future business and timely payments under the new credit terms.

Step 8: Provide Financial Information

If necessary, include relevant financial information that supports your creditworthiness, like recent financial statements or references.

Step 9: Close Professionally

Conclude the letter by thanking the supplier for considering your request. Include a call to action, inviting them to discuss the request further.

Step 10: Include Your Contact Information

End with your name, position, company, and contact details. Offer to provide additional information if needed.

Personal Experience Tips

• Be Concise : Keep your letter succinct yet informative. Avoid unnecessary details that might detract from your main points.
• Maintain Professionalism : Even if you have a casual relationship with the supplier, keep the tone professional and respectful.
• Follow Up : Don’t hesitate to follow up with a phone call or email if you haven’t received a response within a reasonable time frame.

Sample Credit Request Letter To Supplier Template

[Your Name] [Your Position] [Your Company Name] [Your Company Address] [Date]

[Recipient’s Name] [Recipient’s Position] [Supplier’s Company Name] [Supplier’s Company Address]

Dear [Recipient’s Name],

I am writing to express our interest in establishing credit terms with [Supplier’s Company Name]. 

As [Your Position] at [Your Company Name], I have had the pleasure of doing business with you for [duration], and we are keen to continue and deepen this relationship.

Our request for credit terms is driven by our desire to manage our cash flow more efficiently and to align our payment cycle with our revenue stream. 

We believe that a credit arrangement would be mutually beneficial, enabling us to maintain our purchasing volume, even in our off-peak season.

We have always valued the quality and reliability of your products/services and have consistently met our payment obligations on time. 

We are interested in discussing a credit term of [specific credit terms], which we believe reflects our history and future potential as your client.

We are committed to maintaining a strong and reliable partnership with [Supplier’s Company Name] and are confident in our continued business dealings. 

Please feel free to contact me directly at [Your Phone Number] or [Your Email] to discuss this request further.

Thank you for considering our request. We look forward to your positive response and to continuing our successful partnership.

[Your Name] [Your Position] [Your Company Name]

Engage with Us

Share your experiences and tips in the comments below. We’d love to hear how you’ve navigated credit requests and any lessons you’ve learned along the way!

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Frequently Asked Questions (FAQs)

Q: How do I effectively request a credit term extension from a supplier?

Answer: In my experience, it’s crucial to be upfront and honest. I always start by expressing appreciation for our ongoing business relationship. Then, I clearly explain why the extension is needed, providing specific details. 

It’s important to reassure them of your commitment to honoring the new terms and propose a realistic timeline. For example, I once requested a 30-day extension due to unexpected cash flow issues and offered a detailed payment plan to demonstrate my reliability.

Q: What should I include in a credit request letter to a new supplier?

Answer: When I approached a new supplier for credit, I made sure to include essential details. I introduced my business, provided financial statements, and references from other suppliers to establish credibility. 

I clearly stated the credit terms I was seeking and how it would benefit our mutual business relationship. Also, I emphasized our potential for long-term collaboration, which helped in securing favorable terms.

Q: How can I negotiate better credit terms with a long-term supplier?

Answer: Negotiating better terms requires a blend of diplomacy and assertiveness. I always start by reviewing our payment history to highlight our reliability. 

Then, I set up a meeting to discuss our continued partnership and future plans. I propose new terms that would benefit both parties, like extended payment periods or increased credit limits, backed with data on how it can improve our order volume and regularity.

Q: Is it appropriate to use email for a credit request letter?

Answer: Yes, email can be an effective medium. I’ve used it successfully, ensuring my message is professional and concise. 

However, I always follow up with a phone call or a face-to-face meeting to add a personal touch and discuss any concerns they might have. This approach has often helped me in getting a positive response more quickly.

Q: How do I handle rejection of a credit request from a supplier?

Answer: Rejection can be a learning opportunity. I always ask for specific reasons and if there’s room for negotiation. Understanding their concerns helps me to adjust my request or improve certain aspects of my business. Sometimes, 

I’ve even offered alternative solutions like partial credit or shorter payment terms as a stepping stone to build trust.

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• B2B Credit Application: The Ultimat...

B2B Credit Application: The Ultimate Guide to Strengthening Customer Onboarding

Table of Content

Managing bad debt amid rising fed interest rates.

Key Takeaways

• A business credit application is a formal document that a company submits to a creditor when applying for a line of credit.
• In the past, business credit applications used to be sent in a physical form; however, today, businesses prefer online credit applications as they are more accessible.
• Manual credit applications can be time-consuming and lead to errors in information gathering.
• Automated credit applications can boost your credit management system, speed up customer onboarding, and reduce bad debt with real-time credit risk monitoring.

Introduction 

In the B2B space, most businesses operate on credit; however, this system has its drawbacks. Granting credit without thoroughly assessing customers’ creditworthiness could be risky, especially for mid-sized companies. Just as a car requires fuel to run, a mid-sized business needs a healthy cash flow to survive. A single delinquent account can negatively impact your cash flow. Therefore, businesses must carefully evaluate credit applications from customers to reduce risk.

Credit applications have come a long way from paper applications to online applications, and today, many companies are choosing automated credit application processes to optimize their credit management. 

Continue reading to explore the B2B credit application process, common challenges within it, steps to consider before granting credit, and more. Additionally, you can try out ready-made credit application templates to expedite the customer onboarding process and explore an automated credit application for your business.

What Is a Business Credit Application?

A business credit application is a formal document that a company submits to a creditor when applying for a line of credit. This application provides essential information about the business and its finances, helping the creditor evaluate the company’s creditworthiness and ability to repay the debt. 

What is the purpose of a credit application?

The primary purpose of these credit applications is to compile necessary details from the customer, enabling an evaluation of their financials and gauging the inherent risk associated with extending credit to that particular business. Standard information included in a B2B credit application encompasses the business name, address, nature of operations, duration of business activity, financial specifics like revenue and cash flow, and credit references.

In some cases, the B2B credit application might outline credit terms and conditions, encompassing payment timelines, interest rates, and potential fees or penalties.

9 Key Elements to Create the Perfect B2B Credit Application

Creating the perfect credit application for businesses involves including crucial elements that gather comprehensive information while being user-friendly and efficient. Here are the key elements that you must have in your application:

Date of application: Specifying the date is essential to determine when the agreement begins.

Business information section: Provides basic identification details necessary to establish the identity and legal entity of the business.

Legal name of the business 

Business address (headquarters and any additional locations) 

Contact information (phone number, email address) 

Industry or sector in which the business operates

Number of years in operation

Legal structure (corporation, LLC, partnership, etc.)

Ownership and management details: Helps understand the structure and leadership of the business, providing insight into decision-making and accountability.

Names and titles of key executives and decision-makers

Ownership structure (names of owners, percentage ownership)

Contact information for key personnel

Financial information: Assesses the financial health and stability of the business, including its ability to generate revenue, manage expenses, and meet financial obligations.

Annual revenue

Profit margins

Cash flow statements

Balance sheets

Income statements

Financial projections (if available)

Bank references

Trade references : Offers insights into the business’s payment history and relationship with other suppliers or vendors, indicating its creditworthiness and reliability.

Names and contact information of current or previous trade partners

Duration of the relationship

Payment history and credit terms

Credit request: Specifies the amount and purpose of the credit requested, guiding the creditor in assessing the appropriateness and feasibility of the credit arrangement.

Desired credit amount

Purpose of the credit (e.g., inventory purchase, equipment financing)

Proposed repayment terms (length of the credit period, interest rates)

Legal and authorization section: Ensures that the information provided is accurate and authorized by a responsible party within the business, mitigating the risk of fraud or misrepresentation.

Signature of an authorized representative of the business

Acknowledgment of terms and conditions

Authorization for credit checks and verification of information provided

Additional documentation requested: Supplements the application with supporting documents that provide further context and verification of the business’s identity, legality, and financial status.

Business licenses or permits

Tax identification number (TIN) or employer identification number (EIN)

Articles of incorporation or partnership agreements

Personal financial statements of key executives or owners

Instructions and guidance: Helps the applicant understand the purpose of each section and how to complete the application accurately, reducing errors and delays in processing.

Clear instructions on how to complete the application

Explanation of each section and the purpose of the information requested

Contact information for assistance or inquiries

4 Expert Tips To Create a Successful Credit Application

There is nothing better than first hand experience to solidify your business credit application. So, we have brought you some tips straight from our experts to ensure you have the best credit application process for your business. 

Privacy and data security compliance : Ensure compliance with data protection regulations and assure the security of sensitive information provided by the business. This demonstrates the creditor’s commitment to protecting the confidentiality and security of the applicant’s sensitive information, building trust, and compliance with data protection regulations.

Ensure scalability and flexibility in credit application process : Design the application to accommodate potential growth or changes in the business’s needs over time. This allows the application to accommodate possible changes or growth in the business, ensuring that the credit arrangement remains suitable and sustainable over time.

Utilize a user-friendly format: Present the application in a clear, organized, and easy-to-understand format to facilitate completion by the applicant. This enhances the applicant’s experience by presenting information in a clear, organized manner, reducing confusion and streamlining the application process.

Have a robust review and approval process: Outline the steps involved in reviewing and approving the credit application, including estimated timelines and communication channels for updates or inquiries. This sets expectations regarding the steps involved in evaluating the application, providing transparency and accountability in the decision-making process.

Manual Credit Application Process Challenges

The world is moving rapidly today, and this means we have to keep evolving our processes to more efficient methods if we want to keep up. 

Document management and verification are key challenges within the credit application process. The complexity of evaluating diverse financial documents and references can lead to delays and inaccuracies in the decision-making process. This challenge becomes particularly pronounced when handling a large number of credit applications. Here are some significant challenges:

Time-consuming – Manual credit application processes can be time-consuming, especially if companies have to manage a large volume of applications. This can lead to delays in credit decisions, which can impact business operations and customer relationships.

Inconsistent credit risk evaluation – Manual processes can lead to inconsistent assessment of credit applications, as different credit analysts may apply different criteria or weigh factors differently. This can lead to bias and result in inaccurate credit decisions.

Data entry errors – Manual data entry can result in errors, such as typos or transposed numbers, impacting credit decisions. These errors can also be time-consuming to correct and can delay credit decisions.

Limited data analysis – Manual processes can limit the amount of data analysis that can be performed, as analysts may not have access to all the information they need or may not have the tools or resources to analyze data effectively.

Inadequate credit monitoring – Manual application processes can make it challenging to monitor credit risk effectively, as analysts may not have timely access to information about changes in a customer’s credit profile or payment behavior. This can lead to missed opportunities to identify potential credit problems early on and take appropriate measures to mitigate risk.

These challenges can result in inaccurate credit decisions, delays in credit decisions, and increased credit risk. Amidst these challenges, the need for a streamlined and automated credit application process becomes evident. Transitioning to an automated digital solution can help B2B companies mitigate these obstacles and enhance their credit risk management strategies.

The Power of Automation in Business Credit Application Processing

Automation in the credit application process refers to the use of technology and software systems to streamline and expedite the various stages involved in assessing, approving, and managing credit applications. This automation entails leveraging advanced algorithms, data analysis, and digital workflows to replace manual tasks and decision-making processes traditionally performed by humans. The adoption of automation in credit application processing offers numerous benefits for both creditors and applicants, revolutionizing the efficiency, accuracy, and overall effectiveness of the credit approval process.

Benefits of an Automated Credit Application

Automating the credit application process offers a wide range of benefits for both creditors and applicants. Let’s explore.

Enhanced efficiency : Automation streamlines the credit application process, reducing manual tasks, paperwork, and processing time.

Improved accuracy : Automated systems ensure consistent data collection, validation, and analysis, minimizing errors and discrepancies in applicant information. This leads to more accurate credit decisions and reduces the risk of fraudulent or incomplete applications.

Cost savings: By eliminating manual labor and reducing administrative overhead, automated credit application processes result in cost savings for creditors. They require fewer resources to manage and process applications, leading to increased operational efficiency and lower overhead costs.

Improved customer experience : Automation provides a smoother and more streamlined experience for applicants, with faster response times and more straightforward communication throughout the application process. This enhances customer satisfaction and loyalty, fostering positive relationships between creditors and applicants.

Increase in scalability: Automated systems are scalable and can handle a large volume of credit applications without sacrificing speed or accuracy. This scalability allows creditors to efficiently manage fluctuations in application volumes and accommodate business growth without additional strain on resources.

Improves regulatory compliance : Automated credit application systems can incorporate regulatory requirements and compliance checks into the application process, ensuring adherence to legal and industry standards. This reduces the risk of non-compliance penalties and enhances regulatory oversight and reporting capabilities.

Access to data analysis and insights: Automated systems generate valuable data and insights from credit application data, including trends, patterns, and performance metrics. This data can be used to optimize processes, identify opportunities for improvement, and make strategic decisions to drive business growth.

Effortless integration: Automated credit application systems can integrate with other enterprise systems, such as customer relationship management (CRM) software, accounting systems, and loan origination platforms. This integration enables seamless data exchange and workflow coordination, improving overall operational efficiency and collaboration.

By leveraging technology to streamline and optimize credit application processes, creditors can achieve greater productivity, profitability, and competitiveness in the marketplace.

Recommended reading: How Mosaic Accelerated Customer Onboarding by 56% & Saved 40% in FTE Costs with Automated Credit Management

How HighRadius Can Help to Automate Credit Application Processing 

HighRadius offers innovative AI-powered credit management software designed to revolutionize the way businesses manage credit applications. With a specific focus on online credit applications , our software harnesses the power of artificial intelligence and machine learning to automate and optimize the entire credit application lifecycle. 

With real-time credit risk monitoring , you can receive alerts for any changes in your customers’ credit profile and make data-driven credit decisions from unlimited credit reports. Our software integrates with your ERP system and can start monitoring your customers in just 30 days.

We offer configurable scoring models and approval workflows that can be customized based on geography, customer segments, business units, and other factors. You can fast-track credit approvals through complex corporate hierarchies, making the credit application process more efficient and streamlined.

Our highly configurable online credit application allows you to onboard customers across the globe with multi-language, customized credit applications embedded on your website. You can automatically capture financials, personal guarantees, and check bank references, reducing the need for manual data entry.

Our software also automatically extracts credit data from over 40+ global and local agencies, including credit ratings, financials, and credit insurance information. You can configure the auto-extracted data in your preferred currency, making it easier to analyze and interpret.

With AI-based blocked order management, you can auto-predict blocked orders based on the customers’ credit limit utilization and payment history. You can leverage AI-based release or partial payment recommendations for faster credit decisions, reducing the need for manual intervention.

Our software seamlessly integrates with collections, payments, and deductions, allowing you to share credit scores and risk analysis with collectors, review collectible amounts, calculate adjusted credit exposure, and dynamically update credit exposure leveraging payment and dispute information

HighRadius AI-based Credit Risk Management Software simplifies the credit application process, mitigates risk with real-time credit visibility, and manages global portfolios through comprehensive workflows. 

By partnering with us, you can streamline your credit application process, reduce manual interventions, and ultimately provide a better customer experience. 

Read about how Chevron Phillips achieved 61% faster customer onboarding by adopting our credit management software.

1. What are the types of credit application forms? 

Types of credit application forms include consumer credit applications for personal loans or credit cards, commercial credit applications for businesses seeking trade credit, and mortgage loan applications for real estate purchases.

2. What are some tips for determining creditworthiness?

Assess factors like credit history, income stability, debt-to-income ratio, payment history and verify employment and review assets. Consider credit scores and past financial behavior to gauge creditworthiness accurately.

3. How can a business credit application form help mitigate risk?

A business credit application form helps mitigate risk by gathering essential information about potential clients, enabling thorough assessment of their creditworthiness. It allows businesses to evaluate factors like financial stability, payment history, and credit utilization, aiding in informed decision-making and reducing the likelihood of default or late payments.

4. What are the steps of the credit application process?

The steps of the credit application process typically include submission of application, verification of information, credit analysis, decision-making, approval or denial, and establishment of credit terms.

5. What are the red flags on a credit application?

Red flags on a credit application include inconsistent information, gaps in employment history, high debt-to-income ratio, recent delinquencies or bankruptcies, and frequent changes in residence or contact information.

6. Why do we need a credit application?

A credit application is essential for assessing the creditworthiness of potential customers or clients, mitigating risk, establishing credit terms, and ensuring responsible lending practices. It helps businesses make informed decisions about extending credit and managing cash flow effectively.

7. What happens when you submit a credit application?

When you submit a credit application, the lender will review your application to assess your creditworthiness and ability to repay the loan. They will typically check your credit report, income, employment history, and other financial information to make a decision. Once the lender has reviewed your application, they will either approve or deny your request for credit.

8. How long does it take for a credit application to be reviewed?

Generally, it can take anywhere from a few days to a few weeks for a credit application to be reviewed and a decision to be made. However, with the use of automated credit application processing systems, lenders can drastically reduce the time it takes to review credit applications and provide faster, more efficient service to customers.

9. What are quick steps to consider before granting credit? 

Follow these structured steps to make an informed decision: Create a credit policy: Establish a clear policy to outline terms and agreements. Perform a credit check: Review the customer’s financial background for insights. Sign an agreement: Formalize the commitment to payment. Set credit limits: Align limits with credit scores for reduced risk

10. What is an example of business credit?

An example of business credit is a trade credit arrangement where a supplier allows a business to purchase goods or services on credit terms, such as net 30 days, allowing the business to pay for the purchases later after receiving the goods or services.

11. What is the difference between B2B credit applications vs. B2C credit applications?

B2B credit applications involve businesses extending credit to other businesses, focusing on trade credit terms and commercial financial information. B2C credit applications pertain to businesses offering credit to individual consumers, emphasizing personal credit history and consumer financial behavior.

12. What’s Included in a Business Credit Application?’

• Business Information: Company name, address, contact details, and legal structure.
• Financial Data: Revenue, profit margins, assets, liabilities, and credit history.
• Trade References: Details of previous credit relationships with suppliers or vendors.
• Ownership Details: Names, titles, and ownership percentages of company principals.
• Industry Sector: Description of the company’s industry, market position, and competitive landscape.
• Bank Information: Bank account details and references.
• Tax ID: Business tax identification number.
• Purpose of Credit: Intended use of credit and desired credit limit.
• Guarantees: Personal guarantees or collateral provided to secure credit.
• Signature: Authorization and consent for credit checks and terms acceptance.

Related Resources

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Mastering Credit Management: A Comprehensive Guide to Financial Success

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Writing a Business Line of Credit Request Letter (with Sample)

Use this sample business line of credit request letter as a template for your formal request letter. last updated on december 2, 2023.

• Maintain a cash flow
• Launch marketing campaigns
• Upgrade IT systems
• Manage finances during low and high seasons
• Take advantage of business opportunities

• Writing a Credit Card Application Request Letter
• Writing a Bank Loan Request Letter
• Writing a Credit Report Request Letter
• How to Write a Credit Card Cancellation Letter
• Writing a Purchase Order Cancellation Letter ​ ​

The 2023 Guide to Business Credit Applications [Free Templates]

What Is a Credit Application?

Credit applications act as a background check for businesses to determine the level of risk giving an advance to a customer might pose. If a business provides a customer with a product before performing a credit check or receiving payment, then they expose themselves to the possibility of severe interruptions to their cash flow if the customer breaks their agreement. 

A business credit application can make it easy to collect all the information you need to properly gauge the risk a specific customer poses. It can also help you determine how much credit is appropriate at that time.

B2B Credit Applications vs. B2C Credit Applications

While granting a line of credit for a business-to-business (B2B) relationship is similar to business-to-consumer (B2C), what they’re looking for differs. Typically, when a consumer needs to buy something on credit, it’s for a single item that is slightly more costly than their typical expenses, like jewelry or workout equipment. Since B2C credit transactions are typically non-recurring for a high volume of customers, it makes sense to have a bank handle the requests.

Applying for business credit from a vendor is often done with the intention of building a long-term professional relationship. The customer often intends to use what they purchased on credit to help them make their own sale. They then use the profits from the sale to pay off the advanced credit. These purchases can quickly accrue to be worth hundreds of thousands of dollars. The stakes are much higher than B2C and, as a result, the credit check is more complicated.

Secured vs. Unsecured Credit

There are two approaches a business can take when approving business credit applications: secured and unsecured. A secured line of credit requires the customer to put up an asset as collateral. If the customer fails to honor the agreement, the vendor can seize the asset in lieu of payment.

An unsecured line of credit (ULOC) requires no form of collateral and is based on the customer’s credit history. If they are seen as low risk, then they are more likely to be approved for an unsecured line of credit. This is usually determined by the industry the business operates in and their own internal policies.

What’s Included on Business Credit Applications?

For business credit applications to accurately carry out their function, certain information should always be included:

• Applicant’s contact information: This includes the name of the business, billing/shipping addresses, email and phone numbers, and other relevant details.
• Ownership information: Knowing who the owners and principals of the company are can give added credibility to the company.
• Trade reference information: This includes contact information for someone the applicant has a working relationship with and who can provide insight into the customer’s credit history.
• Annual sales: This data is used to get an idea of the applicant’s income to help find a reasonable credit limit.
• Bank information: This includes account numbers and bank contact details to verify the applicant’s average balance.
• Amount of credit requested: The request is compared against their existing financial records to determine if it is reasonable.
• Date of application: The day the request was submitted can help determine when the term should begin.

A business credit application can be tailored to the specifics of any industry. Here are some business credit application templates you can use in your operations or as inspiration for creating your own:

Steps To Approve a Business Credit Application

After receiving a customer’s credit application form, you’ll need to analyze their information to determine if they qualify for a line of credit and how much that might be. For help with the approval process, apply the following steps.

1. Verify All Required Fields

The first step in reviewing your applicant’s business credit application is to ensure it has been filled out completely and correctly. If the credit application was not clear regarding which fields were optional and which were required, it’s possible the applicant left some blank. There’s also the possibility that the applicant entered their information incorrectly if they misunderstood what was being asked. To avoid this, clearly phrase all instructions on the form so the process won’t be unnecessarily prolonged.

2. Cross-check References

Following up with the applicant’s trade references is an important step in the vetting process. These are the people who are vouching for the applicant based on their past working relationship, helping you anticipate how they will act if given a line of credit. In some instances, an applicant may cite fake references with the hope that they won’t be contacted. Make a point to contact these people early on to avoid potential fraud.

3. Evaluate Credit History

An applicant’s credit report can generally be obtained from organizations like the National Association of Credit Management or Dun & Bradstreet . Use these results to inform your decision on whether or not the applicant is eligible for a line of credit and, if they are, for how much.

You may find that a credit report lacks details about a specific company’s financial history, sometimes only reporting on a small fraction of their spending history. To work around this issue, look for a service like Nuvo that offers instant digital bank references and credit reports on the principals of the company to get a better picture of their spending habits.

4 Tips for Determining Credit Worthiness

Knowing when to issue a line of credit and for how much can be a difficult task if left up to each individual’s judgment. Here are some tips for standardizing the process.

1. Establish a Company-wide Credit Policy

A credit policy defines the standards your company uses to vet an applicant as well as how you collect on overdue accounts. Setting a clear policy helps your employees evaluate applicants from an impartial perspective while giving customers a clear understanding of the criteria they must meet. This can help the credit approval process work more efficiently, reducing the number of questions that might arise along the way.

2. Sign a Contract

It’s important that every involved party is held accountable to their end of the agreement. Have the customer sign a contract to minimize the chances of a dispute in the event they default on their payments. The contract will make it clear what they agreed to and give you recourse for collecting what’s owed.

3. Set Realistic Limits

It can be tempting to give an applicant a greater line of credit than their financial history supports for the sake of earning more of their business. This can lead to problems down the line if they overextend themselves and can’t make payments, interrupting your own cash flow. Setting a realistic credit limit is beneficial for both parties in the long run, since this limit can always be increased down the line if the account remains in good standing.

4. Conduct Periodic Credit Reviews

A customer’s credit isn’t a permanent fixture in their financial history — it’s regularly changing. Just like a business can improve their credit, it can easily get worse. By periodically reviewing existing buyer accounts, you’ll stay updated on any increasing risks before the accounts start defaulting, allowing you to take proactive actions. 

Advances in technology have automated many of these steps, removing some of the tedious aspects from the approval process. Nuvo eliminates much of the back and forth of traditional business credit application processes by taking it digital. By actively syncing information from banks and creditors, business suppliers can have the most up-to-date details with less work.

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Free, Printable Business Credit Application Template (Plus, How to Use it Correctly)

Download your free, business credit application template.

*This template is intended for informational purposes. All legal documents should be reviewed by an attorney before use, and terms should be defined to protect you in the event of default.  

Download your free, printable business credit application template so you can extend credit to your customers, or just find out what a business credit application looks like.

Business Credit Workshop coaching students get access to hundreds of actual business credit applications used by banks across the US.

Most of the time, we focus on ways to improve credit profiles and obtain business credit. But, many of our readers, members, and students run B2B operations that serve other businesses. So, it’s crucial that we understand the ins and outs of extending credit to our business clients and customers… when the opportunity arises. 

If you offer your business customers the chance to buy now and pay later, you open a portal to attract more high-ticket sales from those that might not otherwise be able to afford a product or service in a single payment. Plus, by extending lines of credit or private tradelines, you can increase total profits by way of interest and fees. 

Or, if you’re just curious about what to expect when you start applying for business credit yourself, this information (and the downloads above) can be helpful.

Here, I provide a breakdown of the essential elements of a business credit application. Finally, I’ll answer some frequently asked questions and provide guidance for new creditors, including options to create online business credit application forms.  

Fundamentals of a Business Credit Application

I. use google forms, ii. use jotform, iii. use your website’s form builder.

• How Should You Ask a Customer to Fill Out a Credit Application?

How to Pull a Business Credit Report From D&B

How to pull a credit report from experian business, how to pull a credit report from equifax business, how to report on-time payments to d&b, how to report on-time payments to experian business, how to report on-time payments to equifax business, how to report on-time payments to creditsafe.

• 3. Enlist a Third-Party App or Platform to Manage Your Credit Program

Now, let’s get cracking.

What is a Business Credit Application? 

A business credit application is a form that enables a registered entity to apply for a line of credit, term loan, revolving tradeline, or a private net 30 account. It collects identifiable information about the business to determine its creditworthiness. 

A business credit application serves dual purposes: 

• Gather personal, business, and financial data about the applicant
• Serve as a contract between the applicant and creditor

A credit application is considered a legal document, as it should ask for the applicant’s signature. Hence, once signed, and if all terms and conditions are properly outlined in the document, it is legally binding. 

Any company that extends credit to their customers needs an application form to weed out those who would not be eligible for any type of financing. 

To make an informed determination whether or not a company is worthy of business credit, you need specific identifying information. 

• Professional Title 
• % Ownership in Business (Most creditors require at least 50%)
• Company Name
• Tax ID or SSN
• Personal Address (Street, City, State, Zip)
• Business Phone Number
• Business Email Address
• Type of Business
• Years in Operation or Business Start Date
• Business Address (Street, City, State, Zip)
• Legal Entity Type (Proprietorship, Partnership, LLC, Corporation)
• State Registered in
• If DBA or Subsidiary, Parent Company Name & Business Start Date
• Name of Principal Responsible  
• Principal’s Address (Street, City, State, Zip) & Phone Number
• Name of any Co-Principal Responsible (optional)
• Co-Principal’s Address (Street, City, State, Zip) & Phone Number 
• Checking Account (Bank Name, Account No., Contact Info)
• Savings Account (Bank Name, Account No., Contact Info)
• Credit Line (Bank Name, Revolving/Term, Account No., Contact Info)
• Contact Name
• Company Address
• Company Phone Number
• Account Age or Account Open Since
• Credit Limit 
• Current Balance
• Amount of Credit Requested
• Total Business Assets
• Total Business Liabilities
• Annual Net Income
• Yes or No: Have Any Officers Filed a Bankruptcy Petition?
• Yes or No: Is Your Company Subject to Any Litigation? (+Explanation)
• Terms of use
• Interest and Fees
• Penalties for Noncompliance
• Additional Forms Required (Articles of Organization, etc.)
• Disclosure of Credit Pull 
• Applicant Full Name
• Legal Business Name
• Applicant Signature & Date Signed
• Company Seal & Date Stamped

Once the applicant has submitted their app– assuming it appears they have what it takes, and that you would extend them credit — you’ll need to verify their information and move through the rest of the process.  

Here’s How to Create an Online Credit Application Form

In place of or in addition to a paper, pdf, spreadsheet, or doc application, you might want to offer your customers the option to fill out an online credit application form(this is super helpful, especially when applicants are not local). 

So, here’s the scoop. There are multiple ways to create online forms, but here’s what I recommend. 

Google Forms has a straightforward user interface and simple design. While it’s not super customizable, it will get the job done, and it’s free for Google Workspace users — both free, personal accounts and business accounts.  

Jotform is another option — super easy to use — that is free for up to 5 forms and 100 monthly submissions. It’s more customizable than Google forms, with integrations with other platforms you might use like PayPal, Google Sheets, Adobe Sign, and HubSpot. It can cost up to $99 per month, depending on your usage  

If you’re already collecting customer information via contact or subscribe forms on your website, you likely have a form builder that you use. You can probably get into your website dashboard and whip something up based on what you’ve learned here. 

There are many other options out there to help you offer an online application — I’ve just found these to be the simplest to use and most reliable.

How Should You Ask a Customer to Fill Out a Credit Application? 

If you’re eager to extend credit to customers — perhaps you want to use your credit offer as a highlight to make more sales — you can include your credit option at checkout (in-person or online) or during the sales process, depending on how your operations run. 

Service businesses might want to mention their credit application in proposals or bids — at the point just before the sale is made or earlier.  

I also recommend that you bookmark or download our trade reference request template and cover letter template (or create your own), because you can share them with your applicants to help them provide you with more information. Then, you can better determine if they meet your requirements for a credit account.

Recommended Reading: Trade References: Learn Everything You Need to Know

Don’t Forget to Do These 3 Things When You Offer Credit to Your Customers

Here are a few tasty reminders with a helping of details for you to munch on. 

1. Do Your Due Diligence and Be Selective

The application form is only the first part of a credit application. If you are going to extend credit to your business customers, it’s so important to make sure that you verify everything that the applicant tells you. 

Double-check credit report information with Dun & Bradstreet (D&B), Experian Business, and Equifax Business. Pull personal credit reports if you’re wary. Call the references applicants list on their app. Be 100% sure that someone is honest and qualified before you trust anyone in a buy now, pay later situation.  

To get a full D&B credit report and PAYDEX Score, visit D&B’s website and select your plan. It will cost from $61.99 to $799 per year, depending on how many reports you will need. 

To obtain an Experian Business credit report, go to Experian’s website , search for the business (be sure to select Other Business), and choose whether you would like a one-time report for $39.95 or $1,495 to $1,995 per year (for anyone who needs more than three reports monthly). 

To receive an Equifax Business credit report, visit Equifax’s website and fill out the contact form on the Small Business Credit Report page to connect with the sales team — they can hook you up with the right plan. 

2. Consider Reporting Payments to Business Credit Bureaus

As a courtesy to your customers and other creditors, consider reporting on-time payments to the business credit bureaus. Doing so will help your customers establish and grow their business credit profile, and can be a selling point that places you ahead of your competitors.  

Furthermore, reporting slow, late, or missed payments help protect other businesses (like yours) from disreputable companies that tend to stiff their creditors on payments. 

So, you might want to consider reporting on-time payments to D&B, Experian Business, Equifax Business, and Creditsafe — this typically requires that you join their trade exchange programs. 

To report account activity to D&B, you must either be a part of their DNBi or PPP programs or join the trade Exchange Program. To sign up for D&B’s Trade Exchange Program, you need at least 300 active credit customers.  

To apply, either visit D&B’s website or call 1-844-201-9144 to speak to your relationship manager. 

Experian doesn’t charge creditors for reporting, but they have requirements such as, members must report a full portfolio monthly. To become an Experian reporting partner, shoot an email to [email protected] .

You can register to report payments to Equifax via the registration page on their website or by calling 1-800-831-5614 (Select option three to speak to the correct department). 

Creditsafe is not the most popular business credit reporting solution, and will never hold more weight than one of the primary bureaus. Still, third-party data continues to become more and more desirable to creditors. So, after you pull an Experian Business or Equifax Business credit report, you might also pull from Creditsafe. 

Why I mention them here , is because you can join their Trade Exchange Program a bit easier than the other bureaus… and they can automate reporting through your accounting software. Here’s how to leverage the program: 

• Claim your company on Creditsafe’s directory
• Login to your Creditsafe account
• Authorize your accounting or ERP software

Many popular accounting tools will easily integrate (Xero, Quickbooks, and Freshbooks, to name a few). If the platform doesn’t integrate with your software, or if you don’t use accounting software, you can still manually report. 

3. Enlist a Third-Party App or Platform to Manage Your Credit Program (At Least Think About it)

If the sole reason you want to offer business credit is to get more high-ticket sales, and you have no desire to earn income from fees and interest, explore your options for third-party credit offers, since they will make your job so much easier. 

Your choices vary greatly and depend on your business offer. For example, check out Affirm , Klarna , and Afterpay to see if your business might qualify to offer customers their buy now pay later terms — if so, they will do everything for you. 

If you do want to manage your credit program, it’s a good idea to explore debt collection offers so that you might outsource that portion of your work (I can almost guarantee you will have to collect on missed payments at some point). 

To extend business credit to your customers, you can use the business credit application template at the top of this page to get started — note that all legal documents should be reviewed by an attorney. And, printable applications are great, but so are online applications. 

If you’re just starting down the path to offering business credit to your customers, remember to do your due diligence and verify everything on the application. Think about reporting on-time payments to business credit bureaus. And, consider enlisting help from third parties (if you can find an offer that meets your needs). 

Do you have a customer or client who didn’t quite meet the mark and got rejected for a line of credit through your program? Invite them to join Business Credit Workshop to learn how to boost their business credit score and obtain up to $100K in business credit in as few as 30 days.

Related posts:

• Business Credit Repair: How to Get Your Business Credit Back on Track 
• Can You Pay a Mortgage with a Credit Card? The Answer is… Complicated
• Payability: Can You Trust all of the Positive Reviews?
• Trade References: Learn Everything You Need to Know [+Templates]

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THE ULTIMATE GUIDE TO BUSINESS CREDIT APPLICATIONS FOR CREDIT MANAGERS

Business credit applications are critical to help businesses assess and manage credit risk because they will, if you use them correctly, help you identify companies who you may want to be careful with when extending credit. Most companies don’t use business credit applications and even those who do use them don’t follow up on them after they’re filled out or ask for the additional information required to truly understand the risk involved, are you?

Learn more about business credit applications below, best practices for follow-up, financial information to analyze, and how to manage these important documents for reduced credit risk.

WHAT TO INCLUDE IN A BUSINESS CREDIT APPLICATION

Business credit applications can be as simple or as complex as you’d like. At the very least, they should require the applicant to give you the following information:

• Name of the business, address, phone and fax number
• Names, addresses, Social Security numbers of principals
• Type of business (corporation, partnership, proprietorship)
• Number of employees
• Bank references
• Trade payment references
• Business/personal bankruptcy history
• Any other names under which the company does business

This would be considered a pretty basic credit application, a more comprehensive application will give you a better idea and more confidence in your decision; and that requires more information. For a more complete application, you might want to ask for financial information that will allow you to evaluate the following:

PROFITABILITY

Evaluate the expenses and revenues of the customer, are they making money?

FINANCIAL RATIOS

Run the following financial ratios to help determine the financial health of the potential borrower:

• Debt to equity ratio
• Debt to asset ratio
• Current ratio
• Quick (acid test) ratio
• Operating cash flow ratio
• Working capital ratio

Does the borrower have a healthy cash flow from operations, investing, and financing activities? Their cash flow will impact yours, so you want to make sure they have money coming in.

DEBT LEVELS

Find out how much debt the potential borrower has and decipher how much they can afford based on the other financial information you’ve seen. If they look like are in over their heads, you may want to be careful about offering credit.

INDUSTRY EVALUATION

What is the normal debt/liquidity level for companies similar to this borrower’s size in their industry and how do they measure up?

If you decide you do not want to ask for that financial information on your application, you can always purchase a commercial credit report on the potential borrower which would have all of that information included, but that can get pricey over time. Business credit applications should be used for new customers as well as repeat customers if it has been a long time since you last checked their creditworthiness, or if they are asking you to increase their credit limit.

BUSINESS CREDIT APPLICATION BEST PRACTICES

We’ve all done it, we send out the application which is then filled out and returned, and we don’t follow up the references provided. This is a common and costly mistake that credit professionals everywhere make. Always follow up with trade references provided in the credit application and don’t be afraid to ask the customer additional questions either. Below is a list of things you may want to ask during conversations with the trade references or with your potential borrower themselves:

WHAT TO ASK WHEN YOU SPEAK WITH A TRADE REFERENCE

• Is there a pattern of paying some suppliers on time and some late? Why is this? Is it seasonal?
• Is there chronic delinquency or is it sporadic, are there any patterns?
• Is there a seasonal pattern? (this can be worked around)
• Have they had any bad checks?
• Do they order and/or pay consistently?

QUESTIONS TO ASK THE CUSTOMER DIRECTLY

• Is a poor payment history due to employment issues, a one-time event, a personal reason, etc?
• Is cash or COD acceptable with the customer until or if credit is approved?
• Where is the business going and how long has it been in business?
• Who are their customers?
• Does the customer sell on credit to their customers? Do they have credit risk management procedures in place?
• Does the company have any suits, liens, bankruptcies, U.C.C. filings or judgments against them?

MANAGING CUSTOMER CREDIT APPLICATIONS

Sending, receiving, and organizing important documents like a customer credit application is important to make you know that you have the completed document, when it was completed, and that it is being stored securely. That can be tough when you have so many applications to keep track of and an endless number of other credit management tasks to do; so we’ve made it easy. An automated accounts receivable management tool usually has a document management features that not only allows you to save and organize your customer credit applications, it allows you to:

• Save a template in the system to cut down on time spent creating and editing one.
• Send it to customers and receive the completed document through encrypted emails or through a secure customer portal.
• Manage, store, and share other important documents such as invoices, proof of delivery, time sheets, and other documents.

You can also set up the software to notify you when it has been X days/months/years since a customer has filled out a credit application or since you have run a credit analysis on a customer to make sure your company is always protected against credit risk.

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Credit Application Letter

Last Updated On July 16, 2018 By Letter Writing Leave a Comment

When an object is bought without paying money, it is said to have been purchased on credit. The credit application letter is usually issued by guarantors, bankers and the person who give surety in case the debtor is not able to make the payment of the dues. The letter should be drafted in a way that it should take into confidence the owner of the goods regarding the sincerity of the party.

A credit application letter is a request made to the concerned authority to extend the credit period. It can be done orally, but it is wise for you to write a letter so that the record is maintained.

Credit Application Letter Writing Tips

• As it is a formal letter, it has to be simple, precise and easy to understand.
• The content of the letter should be straightforward and short. But at the same time, it should contain all the necessary information.
• The letter must be clear, understandable and to the point.
• The language used must be formal and convincing enough.

Credit Application Letter Template

Use our free Credit Application Letter to help you get started.

______________ (Your name)

______________ (Your address)

__________________

Date: __________ (date of writing letter)

__________ (customer’s name)

__________ (customer’s address)

Subject:___________

Dear Mr. /Ms__________ (name of the concerned person),

We are happy to know that you are interested in the company and we work hard to serve the best to our customers. You have been one of the most valuable clients of our business.

We have attached a credit application form with this email so that we know what our customers like and dislike about our services. The information that we need from you is private, so we make certain to keep the details protected.

(Mention the reasons why you want them to fill the credit application form)

(Mention how will it help them and the company)

Kindly fill the form and send back to us. We will provide you the third-day payment term after the approval of the form.

Thanks and regards,

……………………….(name and designation)

Sample Letter

From, Rajesh Koothrapalli, 45 Winston Place, Tower Drive, Hyderabad

Bhaskar Ranjan,

45, Highrise Towers,

Subject: Credit Application letter

Dear Mr. Ranjan,

We are glad that you have an interest in our company for business purpose and we strive to serve our customers to the best of our interests. We recognize the fact that you have been a valuable customer for our company for the past several years.

We request our customers to give a credit application so that we can offer our products at competitive and reasonable prices. We are aware of the fact that the information we request is sensitive. However please understand that we seek the same information from all our customers so that we can protect you from making payment of higher prices because of other persons’ bad credit.

We request you to fill up the enclosed application form and send it back to us at the earliest. We can offer you a thirty-day payment term after approval.

Looking for a favorable response,

Thanking you,

Yours Sincerely,

Rajesh Koothrapalli

Email Format

Below is an email format of a Credit Application Letter.

To: [email protected] From: [email protected]

We are happy that you have a business interest in our company and we always strive to serve our customers to the best of our abilities. You have been one of our valued customers all these years.

We are seeking a credit application form from our clients so that we can offer them our goods at competitive and reasonable prices. Though we are aware of the fact that the information we want is sensitive, we give you an assurance that the same information is sought from all the customers so that we can give protection to you from making payment of higher prices because of the fault of other clients’ bad credit.

We have enclosed a credit application letter along with this letter. Please fill in the details at the earliest and send it to us. After we receive the letter from you, we can give you a thirty-day payment term after approval.

Related Letters:

• Sample College Application Letter
• Sample Loan Application Letter
• Application Letter to Bank Manager
• Sample Job Application Cover Letter
• Job Application Letter
• Transfer Application
• Application Letter by Fresher
• Application Letter for Referral
• Business Application Letter
• College Application Letter
• General Application Letter
• Good Application Letter
• Grant Application Letter
• Letter Of Intend Application
• Job Application E-Mail Template
• Job Application Letter Format
• Job Application Letter Template
• Receptionist Application Letter
• Sample Application Letter
• Solicited Application Letter
• Summer Job Application Letter
• Work Application Letter
• Unsolicited Application Letter
• Corporation Application Letter
• Rezoning Application Letter

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How to apply for a business credit card

Learn about the business credit card application process—how it works, what information you need and when you should apply..

July 26, 2022 | 9 min read

Business credit cards can be important tools to help you grow and manage your business. A business credit card can be a great way to increase your purchasing power. It can also deliver other important benefits like helping you build a credit history, ensuring smooth cash flow, making record-keeping easier, and delivering attractive rewards and incentives for using the card. 

If you've been searching for a business credit card to fit your needs, you likely have found a wide assortment of options—and an even wider array of terms, conditions, benefits and features. If you're a new business owner and are unsure of how to apply for a business credit card, this article will help clarify how to apply for a business credit card and the most efficient steps to go from application to approval. 

How to get a business credit card

It's relatively simple to apply for a business credit card. Much of the process is similar to applying for a personal credit card. To start, review the card options available and choose a card that meets your business's needs. Then, take some time to check your personal credit, gather the information needed to apply for the credit card and complete your application. We'll break down each of these steps to applying for a business credit card in greater detail and include tips to keep in mind at each step.

Step 1: Research business credit cards

There is a wide range of business credit cards that suit a variety of business needs. It's just a matter of matching card offerings with your needs. If you travel often, you may want a business credit card that offers travel points and miles incentives. If you plan on using your credit card to pay vendors, a business credit card with cash-back rewards may be an option to consider. Learn more about the different Capital One Business credit cards by comparing them with your business goals. 

Here are some practical tips to keep in mind to help you make the most informed choice as you research your business credit card options:

• Review your business expenses to see how much and where you're currently spending your money. This will help you understand what rewards programs (like travel miles and cash back) would benefit your business most. 
• Understand rewards caps and redemption rules, which can limit how you use your rewards. 
• Compare fees and interest rates. If you carry a card balance each month, a low interest rate will be important. Remember that annual percentage rates (APRs) are determined by your creditworthiness. Advertised low rates aren’t guaranteed. There are also cards that require you to pay your balance in full each month. 
• Understand the qualifications necessary for approval, like a personal guarantee and personal credit score thresholds. 
• Look into special signup or welcome bonus offers and understand the requirements for spending to qualify for the offer.
• Research what credit reporting agencies the cards report to—such as Equifax® or Experian®—if you’re interested in building up your business credit score.

Step 2: Choose a card that meets your needs

Once you've narrowed your options for business credit cards with offers, perks and rates that align with your business needs, you’ll want to compare benefits, cardholder obligations and qualification criteria side by side. To make this process easier, compare cards in the same category. For example, compare travel rewards cards to other travel rewards cards. Compare Capital One Spark Business card benefits —including perks, tools and rewards.

Step 3: Check your personal credit score

Once you have an idea of which card you want to apply for, take a moment to check your personal credit scores. The higher your scores, the more likely you'll be approved for a business credit card with the best rates. Most credit card issuers provide their cardholders free access to their personal credit scores.

CreditWise from Capital One is a free tool that allows you to monitor and stay on top of your credit score. 

Each business credit card will indicate its recommended credit score ranges for qualification. If your credit score doesn't fall within the range for the business credit card you want, paying bills on time and paying down credit card debt can help improve your score. If this is the case, consider looking for a card that supports credit building.

Step 4: Gather the information needed to apply

Prepare to complete a business credit card application by gathering all the necessary information that is required. You'll need information about income and expenses for your business; your personal identification information, like your Social Security number; plus business identification information, such as your employer identification number (EIN) or tax identification number. Additionally, you'll need to know the legal name, address, birthdate and Social Security number for any beneficial owners or business controllers with a 25% or greater stake.

Step 5: Complete the application

When you're ready to apply, fill out an online application for a business credit card. It usually takes less than 10 minutes to complete. You may be asked to verify certain information or provide additional details as your application is reviewed.

Remember that each application will result in a credit inquiry, which shows up on your credit report and may lower your credit score.

Step 6: Wait for the approval decision

Once you submit your application, it will be reviewed by the card issuer. You may be approved within a few minutes or within a few days. Once approved, you'll receive your business credit card by mail in about seven to 14 business days.

What you need to apply for a business credit card

The business credit card application process is similar to applying for a personal credit card. There will be a section requiring personal information such as your name, Social Security number, home address and annual income. There will also be a section asking for specific information about your business. That information may include:

• Contact information: Provide your business's mailing address and phone number.
• Legal name of your business : Provide the name you're doing business under, such as the name you registered as a limited liability company (LLC) or S or C corporation with your state. If you're a sole proprietor, just provide your legal name.
• Federal tax ID: If you registered your business with the state, you received a nine-digit federal tax ID number, or EIN. Input that number in this section. If you're a sole proprietor, list your Social Security number.
• Type of industry (NAICS code): You'll likely find a drop-down list of industry classifications in this section. These classifications categorize companies by their primary business activity. Choose the classification that most closely applies to your business.
• Legal structure of your business: If you've registered your business with the state, your business is classified as a specific legal structure, such as a corporation, partnership, nonprofit, LLC or cooperative. If you're a freelancer or a one-person business and haven't registered with the state, your business is considered a sole proprietorship.
• Revenue: List your previous year's annual revenue before taxes and expenses.
• Monthly expenses: List your average monthly credit card expenses for the business.
• Beneficial owners or business controllers: If your business is a corporation or partnership, you'll be asked to list the names, contact information and personal identification information of people who are beneficial owners—those who own at least 25% of your company. 
• Years in the business: Select the amount of time your business has existed.
• Your role in the business: List your role—such as owner or partner.

Frequently asked questions

When is the right time to apply for a business credit card?

The right time to apply for a credit card will vary depending on unique aspects of your company, including things like where you are in your seasonal business cycle. That’s why it's important to consider your business needs, goals and requirements and your own credit preferences as a business owner.

Whether you need to finance a large purchase or are just looking for additional travel rewards, make sure your personal credit score is in good shape before you apply for a business credit card. If you’ve just launched your business, be sure you have a business plan that helps project annual revenue and expenses, since this information will be required on your application.

Who can apply for a business credit card?

Business credit cards aren't just for those who own a corporation, partnership or limited liability company. Freelancers and independent contractors are considered self-employed business owners, commonly known as sole proprietors. Simply put, if you work for yourself, you may be eligible for a business credit card. 

Keep in mind that your personal credit score will be taken into consideration during the application review process.

Does applying for a business credit card affect personal credit?

Applying for a business credit card can affect your personal credit since a credit card issuer will conduct a personal credit inquiry as part of the application review process. Each credit inquiry may lower your credit score and show up on your personal credit report.

Can you apply for a business credit card with an EIN?

When you apply for a business credit card with your EIN, the application will also require that you list your Social Security number. Card issuers will use your Social Security number to check your personal credit as part of the application review process. Doing so helps them understand your personal track record in managing credit and paying off debt.

Take the first step by comparing Spark Business cards today

A business credit card can be an important management tool that helps your business maintain ample cash flow, establish a business credit history, and take advantage of important perks and rewards. The best business credit card for your company depends on how you want to use that credit and what rewards will work best for your enterprise.

Ready to find one? See if there's a Capital One Spark Business credit card that's right for you.

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Sample Letters

Unique letters by an experienced writer

Sample Business Credit Application

The terms under which the credit facilties are agreed will depend on factors such as :

• length of time as a customer
• previous payment history
• size of orders
• potential growth in purchases
• good references

Business credit application letter – Sample 1

[ Your Company Name ] [ Your Company Address ]

[ Company Name ] [ Company Address ]

Dear [ Name of Recipient ],

Our company, [ NAME OF YOUR COMPANY ], is looking to open a line of credit with [ COMPANY OF RECIPIENT ]. We have been operating in the industry for [ NUMBER OF YEARS ] in [ LOCATION OF YOUR COMPANY ] and we have been using your services for a long time.

[ Describe the reason why you need the credit and where it will be used ]

Bankers and trade references can be provided on request.

If you require other information to be provided or there are forms that we need to submit, please let me know.

Thank you for your kind consideration.

Yours Sincerely,

[ Your name ] [ Position ]

Sample 2: Date Name Position Company Address

Dear [Mr. or Ms. Last Name]: This is to request a credit line for our company.

We would like to tell you that we are impressed on the services that you are offering and we know several people who recommended your services to us.

[COMPANY INFORMATION]

We attached some purchase orders from our clients. What we provided are only some of the documents that we have and all of these are still incomplete as they are only meant to provide you an idea on our services. You can also check with our background to know the credit standing of our company.

If you will need other supporting documents or there are application forms that we need to fill up, please feel free to contact us anytime.

Truly yours,

[Name] [Position]

Date Name Position Company Address

Dear [Mr. or Ms. Last Name]:

Our company, [NAME OF COMPANY] would like to establish a line of credit with [COMPANY OF RECIPIENT]. My employees have been going into your store several times every month and it would be easier if we will be able to pay it by the end of each month. Based on the per month purchases that my employees have been making, we would like to request a [AMOUNT OF CREDIT].

If you want to have an idea on our company’s credit worthiness, you can try to contact some of the companies that we have dealt with on the past few years:

[LIST OF COMPANIES AND CONTACT INFORMATION]

Thank you for your kind consideration and we are looking forward to hear from you.

[YOUR NAME] [POSITION]

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• Letters of Credit

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• Lines of Credit
• Credit Card
• Commercial Real Estate

Wells Fargo Commercial Letter of Credit

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Wells Fargo Standby Letter of Credit

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Why a Business Platinum Credit Card?

The Business Platinum Credit Card is a revolving credit option for everyday business expenses for businesses with annual sales up to $2 million and needing fewer than 100 cards. It comes with a free rewards program and your choice of rewards points or cash back. Please view details for more information on rates, fees, and features.

Why a Business Elite Signature Card?

The Business Elite Signature Card is a credit card for established businesses with annual sales over $1 million. It offers more purchasing power, enhanced benefits and added security to control employee spending. You can also choose to earn rich rewards points or cash back. Please view details for more information on rates, fees, and features.

These loans allow businesses to finance one-time expenses with the flexibility to pay over a short or longer term. One easy application to get options.

Why an Equipment Express Loan?

This loan provides buying power for established businesses to purchase new or used vehicles or equipment at competitive rates with flexible terms.

Why an unsecured business line of credit?

Wells Fargo unsecured business lines of credit are ideal for new or established businesses looking for an unsecured financing solution to supplement cash flow, take advantage of unexpected business opportunities, expand your business, or cover expenditures.

Why a Prime Line of Credit?

Expand, grow or improve your business by increasing your cash flow cycle.

Why a purchase loan?

Buy commercial real estate for your business, or as a real estate investor.

Why a refinance loan?

Pay off an existing mortgage on a business or commercial investment property, including potential cash-out opportunities.

Why an equity loan?

Use the equity in your commercial real estate to finance business expansion, equipment upgrades, and property improvements.

Why an equity line of credit?

Leverage the equity in your commercial real estate for property improvements, business expansion, or the purchase of large equipment or property. Enjoy unlimited draws for the first five years.

Why a Commercial Letter of Credit?

The Commercial Letter of Credit fulfills payment per a contract agreement, typically used for international or domestic trade.

Why a Standby Letter of Credit?

The Standby Letter of Credit provides an independent assurance of creditworthiness to complete a defined task, project, or payment from the applicant to the contract beneficiary.

Offer valid 10/01/2022 - 06/30/2023. For customers who select the Wells Fargo Business Card Rewards ® cash back program: To earn the one-time $300 cash back bonus, a total of at least $3,000 in qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, and SUPERCHECKS TM transactions, or any fees or interest posted to the account) must post to your Wells Fargo business credit card account within the first 3 months after the account opening date. The $300 cash back bonus will be posted to the account 1 - 2 statements after the spend requirement is met. You must remain in the cash back program for the full duration of the introductory period (3 months) in order to receive the $300 cash back bonus. If you switch or cancel rewards programs during the introductory period, you forfeit the cash bonus. Only one cash back bonus per company. This offer is not available if the business already has a Wells Fargo business credit card or had a Wells Fargo business credit card opened or closed in the immediately preceding 12 months.

Offer valid 10/01/2022 - 06/30/2023. For customers who select the Wells Fargo Business Card Rewards ® points-based rewards program: To earn the one-time 30,000 bonus points, a total of at least $3,000 in qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, and SUPERCHECKS TM transactions, or any fees or interest posted to the account) must post to your Wells Fargo business credit card account within the first 3 months after the account opening date. The 30,000 bonus points will be posted to the account 1 - 2 statements after the spend requirement is met. You must remain in the points program for the full duration of the introductory period (3 months) in order to receive the 30,000 bonus points. If you switch or cancel rewards programs during the introductory period, you forfeit the bonus points. Only one points bonus per company. This offer is not available if the business already has a Wells Fargo business credit card or had a Wells Fargo business credit card opened or closed in the immediately preceding 12 months.

There is no annual rewards program fee. If you select the Wells Fargo Business Card Rewards ® cash back program option, you will earn 1.5% cash back for every dollar spent on qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, and SUPERCHECKS TM transactions, or any fees or interest posted to the account) for the life of the account. Earned cash back is credited quarterly (March, June, September, and December) to your Wells Fargo business credit card account or to an eligible business checking or savings account. The cash back earned and transferred to the primary business credit card account from employee card accounts in March, June, September, and December cycles will not be credited until the next quarterly rewards distribution cycle. There is no limit to the cash back earned. Wells Fargo reserves the right to cancel, alter, or temporarily suspend the program at any time without notice. Some restrictions may apply. Additional information about the cash back program will be mailed separately.

There is no annual rewards program fee. If you select the Wells Fargo Business Card Rewards ® points program option, you will earn one point for every dollar spent on qualifying purchases (purchases less returns and credits) for the life of the account. Purchases made using a PIN, ATM transactions, cash advances of any kind, balance transfers, SUPERCHECKS TM , wire transfers, casino gaming chips, gambling transactions of any kind, and any fees or interest posted to the account will not earn points. To earn the 1,000 bonus points each billing cycle, your total company spend must be a minimum of $1,000 in qualifying purchases. For companies with individual billing, bonus points calculation is based on owner points earned in the current statement cycle, plus employee points earned in the previous statement cycle. The bonus maximum is 1,000 points per company per month. Wells Fargo reserves the right to cancel, alter, or temporarily suspend the program at any time without notice. Some restrictions may apply. See additional information about the points program at wellsfargo.com/businessrewards .

Offer valid 10/01/2022 - 06/30/2023. Your initial rate will be a 0% fixed interest rate for the first 9 months after account opening as long as a default does not occur under the terms of your Customer Agreement. Introductory rates will not apply to balances remaining after the end of the introductory period or to cash advances, which include online and telephone transfers and SUPERCHECKS TM transactions, incurred at any time. You will be assigned a variable interest rate between Wells Fargo Prime + 7.99% and Wells Fargo Prime + 17.99%, depending on your personal and business credit evaluation. Rates are subject to change and may be higher or lower than the stated ranges. The interest rate that you are assigned applies to purchases after the expiration of the introductory period, unless a default occurs under the Customer Agreement and we elect to increase the rate, or we exercise our right to change the terms of the account. The interest rate for balance transfers and cash advances, incurred at any time will be Prime + 20.74%, unless a default occurs under the Customer Agreement and we elect to increase the rate, or we exercise our right to change the terms of the account. Prime refers to Bank’s announced Prime Rate . Bank's announced Prime Rate is subject to change at any time. If a default occurs under the Customer Agreement, the interest rate applied to all balances may be increased by the Bank to a rate equal to Prime + 24.74%, subject to a maximum rate of 29.99%. There is a 4% ($10 minimum; $175 maximum) fee for balance transfers and cash advances, which include online and telephone transfers and SUPERCHECKS TM transactions. Generally, we will apply your Minimum Payment first to balances with lower interest rates (such as Purchases) before balances with higher interest rates (such as Cash Advances). Payments made in excess of the Minimum Payment will be applied to balances with higher interest rates first before balances with lower ones. Therefore, the benefit of an introductory offer will be reduced if the account has existing balances or additional transactions that are subject to standard interest rates. Carrying any balance, including an introductory balance, from month to month will eliminate an interest-free grace period for purchases during that month.

Offer valid 10/01/2022 - 06/30/2023. For customers who select the Wells Fargo Business Elite Card Rewards ® cash back program: To earn the one-time $1,000 cash back bonus, a total of at least $25,000 in qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, or any fees or interest posted to the account) must post to your Wells Fargo Business Elite Signature Card account within the first 3 months after the account opening date. The $1,000 cash back bonus will be posted to the account 1 - 2 statements after the spend requirement is met. You must remain in the cash back program for the full duration of the introductory period (3 months) in order to receive the $1,000 cash back bonus. If you switch or cancel rewards programs during the introductory period, you forfeit the cash bonus. Only one cash back bonus per company. This offer is not available if the business already has a Wells Fargo business credit card or had a Wells Fargo business credit card opened or closed in the immediately preceding 12 months.

Offer valid 10/01/2022 - 06/30/2023. For customers who select the Wells Fargo Business Elite Card Rewards ® points-based rewards program: To earn the one-time 100,000 bonus points, a total of at least $25,000 in qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, or any fees or interest posted to the account) must post to your Wells Fargo Business Elite Signature Card account within the first 3 months after the account opening date. The 100,000 bonus points will be posted to the account 1 - 2 statements after the spend requirement is met. You must remain in the points program for the full duration of the introductory period (3 months) in order to receive the 100,000 bonus points. If you switch or cancel rewards programs during the introductory period, you forfeit the bonus points. Only one points bonus per company. This offer is not available if the business already has a Wells Fargo business credit card or had a Wells Fargo business credit card opened or closed in the immediately preceding 12 months.

If you select the Wells Fargo Business Elite Card Rewards ® cash back program option, you will earn 1.5% cash back for every dollar spent on qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, or any fees or interest posted to the account) for the life of the account. Earned cash back is credited quarterly (March, June, September, and December) to your Wells Fargo business credit card account or to an eligible business checking or savings account. The cash back earned and transferred to the primary business credit card account from employee card accounts in March, June, September, and December cycles will not be credited until the next quarterly rewards distribution cycle. There is no limit to the cash back earned. Wells Fargo reserves the right to cancel, alter, or temporarily suspend the program at any time without notice. Some restrictions may apply. Additional information about the cash back program will be mailed separately.

If you select the Wells Fargo Business Elite Card Rewards ® points program option, you will earn 1 point for every dollar spent on qualifying purchases (purchases less returns and credits, and excluding balance transfers, cash advances, or any fees or interest posted to the account) for the life of the account. To earn the 5,000 bonus points each billing cycle, your total company spend must be a minimum of $10,000 in qualifying purchases. For companies with individual billing, bonus points calculation is based on owner points earned in the current statement cycle, plus employee points earned in the previous statement cycle. The bonus maximum is 5,000 points per company per month. Wells Fargo reserves the right to cancel, alter, or temporarily suspend the program at any time without notice. Some restrictions may apply. See additional information about the points program at wellsfargo.com/businessrewards . 

See the Guide to Benefits for complete Terms and Conditions.

As of 5/26/2020, Unsecured Business Loans rates range from 6.25% to 22.99% and will be based on the specific characteristics of your credit application including, but not limited to, evaluation of credit history and amount of credit requested. The interest rate is fixed for the life of the loan. Please talk to a banker for information on the most current rates.

FastFlex Small Business Loans require an existing Wells Fargo Business Demand Deposit account for at least 12 months to qualify. We evaluate each application on its merits. All credit decisions are subject to credit approval.

Instant decision based on approvability. Some applications will result in a pending status, which requires further review before final decision is rendered.

You must access funds from the Equipment Express ® loan account within 60 days of account opening.

As of 5/26/2020, vehicle loan rates start at 4.50% based on term length, credit history, and vehicle being financed. As of 5/26/2020, equipment loan rates start at 5.00% based on term length, credit history, and equipment being financed. Rates assume automatic payment from an eligible Wells Fargo business checking account, and may be higher if the borrower fails to provide collateral, or an account default occurs.

The Wells Fargo BusinessLine line of credit is available for businesses in operation for two or more years. If this requirement is not met, you may be eligible for a Wells Fargo Small Business Advantage ® line of credit.

Offer valid 01/01/2024 – 3/31/2024. For a BusinessLine ® line of credit, the annual fee is waived for the first year only. The annual fee of $95 (if line amount is $10,000 - $25,000) or $175 (if line amount is more than $25,000) will be assessed on your anniversary month in subsequent years.

Terms for credit products are subject to final credit approval of the business and its owners. A physical address is required to receive a Wells Fargo business credit product. You must be an owner of this business and not already have this product.

For BusinessLine line of credit, your rate will be between Prime + 1.75% and Prime + 9.75% depending on your personal and business credit evaluation. Prime refers to Bank's announced Prime Rate . Bank's announced Prime Rate is subject to change at any time. The interest rate that you are assigned will continue unless a default occurs under the Customer Agreement and we elect to increase the rate, or we exercise our right to change the terms of the account. Rates are subject to change, and may be higher or lower than the stated ranges. Interest accrues immediately whenever you use your line of credit account, including by use through Mastercard purchases, checks, and transfers.

Customers are automatically enrolled in the Wells Fargo Business Line Rewards program at the time of new account opening, with no annual program fee. One dollar spent using the Mastercard access card earns one Business Line Rewards point, based on qualifying purchases (purchases less returns and credits), and does not include any fees posted to the account. If you have at least $1,000 in qualifying purchases, made with the Mastercard access card, on the account in a billing cycle, you will earn 1,000 bonus points. Valid as long as a default does not occur and subject to change under the Customer Agreement. Wells Fargo reserves the right to cancel, alter, or temporarily suspend the Program at any time without notice. Some restrictions may apply. See the Wells Fargo Business Rewards Program Terms and Conditions for details.

The Wells Fargo Small Business Advantage line of credit is available for businesses in operation for less than 2 years and U.S. SBA requirements must be met, including the requirement that household personal liquid assets be less than $500,000. Small Business Advantage line of credit is available to for-profit businesses only. Additional terms and conditions apply. If these requirements are not met, you may be eligible for a Wells Fargo BusinessLine ® line of credit.

For Small Business Advantage line of credit, your rate will be between Prime + 4.50% and Prime + 6.50%, depending on your personal and business credit evaluation. Prime refers to Bank's announced Prime Rate . Bank's announced Prime Rate is subject to change at any time. The interest rate that you are assigned will continue unless a default occurs under the Customer Agreement and we elect to increase the rate, or we exercise our right to change the terms of the account. Rates are subject to change, and may be higher or lower than the stated ranges. Interest accrues immediately whenever you use your line of credit account, including by use through Mastercard purchases, checks, and transfers.

For Prime line of credit, rates start at Prime + 0.50%, subject to minimum floor rate of 5.00%, depending on your personal and business credit evaluation. Prime refers to Bank's announced Prime Rate . Bank's announced Prime Rate is subject to change at any time. The interest rate that you are assigned will continue unless a default occurs under the Customer Agreement and we elect to increase the rate, or we exercise our right to change the terms of the account. Rates are subject to change, and may be higher or lower than the stated ranges. Interest accrues immediately whenever you draw funds from your line of credit account.

The security interest taken will be a first priority lien on all present and future accounts receivable, inventory, equipment, general intangibles, and certain other noncash personal property owned by the applicant business, and a Uniform Commercial Code financing statement will be filed against the applicant business to perfect the security interest.

The Prime Line of Credit has a term of 1 year, but may be renewed annually, subject to credit approval.

If environmental insurance or an environmental assessment is required, you will be responsible for this one-time fee. You will be responsible for any mortgage or deed of trust filing fee imposed by a state or other taxing authority. You will be responsible for all title and escrow fees and costs, including all title-related closing or attorney fees and costs.

You will need to pay a deposit of up to $1,000 when accepting the conditional approval terms of any loan. The deposit is nonrefundable if the loan transaction does not close for any reason. However, if the loan transaction does close, the deposit will be applied to any applicable fees due at closing, and if there is any unused portion of the deposit, it will be returned or credited to you after closing. For purchase loans, the customer will need to provide proof of funds for the required down payment. All financing is subject to credit approval.

Your rate locks upon receipt of a completed application and the required documentation for underwriting. If your loan does not close within 90 days of your application date, your rate lock will expire and you may be subject to the current rate.

Loans for the purchase of investor commercial real estate are available only to established Wells Fargo customers. An established Wells Fargo customer is either (i) a borrower who has a Wells Fargo business checking or savings account that has been open for a minimum of six months at the time of the applicable credit application, or (ii) a borrower or guarantor who is a Wells Fargo consumer banking customer with $2 million in deposits and/or Wells Fargo investments under management at the time of the applicable credit application. Alternatively, a borrower or guarantor who has (i) a Wells Fargo consumer checking or savings account, that has been open for a minimum of two years at the time of the applicable credit application, and (ii) two years of commercial real estate investor experience with like property, will also satisfy the established Wells Fargo customer requirement. All accounts must be in good standing.

Based upon analysis of application, appraisal and origination fees, and interest rates, for competing U.S. lenders as compiled by an independent third-party research firm on a quarterly basis.

We'll match or beat a competing offer (rate and fee combination), when a competitor's formal written approval is provided to us, or pay you $200. Terms and conditions apply.

Financing from $50,000 to $1,000,000 on purchase and refinance loans in first lien position; $50,000 to $500,000 for equity loans, cash-out on refinance loans, and second lien position refinance loans.

If an environmental assessment or seismic evaluation is required, you will be responsible for this one-time fee. You will be responsible for any mortgage or deed of trust filing fee imposed by a state or other taxing authority. Wells Fargo Bank will pay title policy costs, but you will be responsible for all title-related closing or attorney fees and costs. For refinance loans as a result of a partner buy-out, you will be responsible for title policy costs and all other title-related closing or attorney fees and costs.

You will need to pay a deposit of $1,000 when accepting the conditional approval terms for any loan. The deposit is nonrefundable if the loan transaction does not close for any reason. However, if the loan transaction does close, the deposit will be applied to any applicable fees due at closing, and if there is any unused portion of the deposit, it will be returned or credited to you after closing. All financing is subject to credit approval.

Second lien loans and lines are only available behind a Wells Fargo Bank first mortgage for established Wells Fargo business checking or savings account customers. Commercial condo and special purpose properties are not eligible for second lien loans or lines.

You will need to pay a deposit of $1,000 when accepting the conditional approval terms of any line of credit. The deposit is nonrefundable if the line of credit transaction does not close for any reason. However, if the line of credit transaction does close, the deposit will be applied to any applicable fees due at closing, and if there is any unused portion of the deposit, it will be returned or credited to you after closing. All financing is subject to credit approval.

Wells Fargo Bank, N.A. Member FDIC.

QSR-04132025-6021381.1.1

Word & Excel Templates

Printable Word and Excel Templates

New Credit Application Letter to Customers

People who regularly buy products from a brand eventually develop trust and a strong relationship. Owing to this, they get the entitlement to apply for buying products on credit. When products are purchased on credit, the customer saves himself from having to pay individually for every purchase.

There may be many issues such as lack of money or unavailability of cash that may hinder the customer to complete the process of buying a product. Therefore, they choose to write the credit application letter in order to request for getting permission to buy things first and pay later.

What is a new credit application letter to customers?

Usually, a customer writes a request letter to a business and asks for the opening of a credit account. In some cases, the business also writes this letter to customers when it wants its buyers to buy products without paying on the spot.

When to write?

Now the question is what makes a business write this letter. There are certain situations and some of these are given below:

When a customer has requested the procedure:

A common situation is when customers request a business to provide them with the information about the entire procedure of getting new credit. In response to the letter or email from the customer, the business replies with this letter and attaches an application form so that the customer can fill it out and initiate the procedure.

When sales of a business are reduced:

Oftentimes, a business realizes that its sales are declining because it does not offer its products on credit, and people who cannot pay immediately switch to those brands that provide them with the opportunity to pay later. So, in order to inform the buyers that buying products with the intent to pay later is possible now, they write this letter.

How to write?

In order to write a letter that is professional and addresses important details in an effective manner, you can follow the tips given below:

Start the letter with admiring the buyers:

As soon as you start the letter, admire the customer for being a loyal buyer and for staying with the company despite the fact that there are many options available. Express your plans to serve the business with better services. This part of the letter pleases the buyer and makes him feel valued. For a business to be successful, it is very important to give due value and respect to purchasers.

Ask the customers to fill out the form:

If you want shoppers to start buying products from you on credit, ask them to fill out the form that you have attached with the letter. Describe that filling this form will be considered as a request from consumers to make some purchases from the business without paying on a spot.

Develop trust:

If you know that the consumer might not be comfortable sharing personal information by filling this form, tell how you are intended to use the shared information and what steps you will take to keep the information protected. 

Sample letter:

Subject: New credit application for [X]

Dear value customer,

We are so pleased to know that you are interested in our company and it has always been our topmost priority to serve our customers with the best services.

It is our humble request to our respected customers to submit a credit application. After receiving this application, we will be in a better position to offer our products at the best-discounted prices. We are cognizant of the fact that the information we require from you is a bit sensitive and you may not be comfortable sharing it. However, we collect this information from all our customers. In addition to it, we always take care of this information. It is our top priority to save you from having to pay a higher price just because of the bad credit of other people.

We have enclosed an application form in this letter that you are requested to fill out at your earliest convenience. This way, we will be able to process the information in a better way.

We are looking forward to a humble response from your side.

File: Word (.docx) & iPad Size 22 KB

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Ask an Applicant For Credit to Submit More Information • Example Letters, Guides and Samples

This letter should acknowledge the receipt of an applicant's request for a credit account and ask for more information to help you evaluate the application. Assure your reader that any information he or she gives you will remain confidential.

How to write this credit letter:

• Thank the applicant for expressing interest in your company or in obtaining a credit account from your company.
• Politely ask for the additional information. Let the applicant know that your request is standard.
• Assure the applicant that you will keep the information confidential.
• Thank the reader for his or her cooperation and ask for a prompt reply.

Example Letter #1

Thank you for your interest in establishing a credit line with Doe Corporation. To process your application, we will need the following additional information:

1. Social security number

2. Monthly payment amount on your second mortgage loan

3. Verification of income from your present employer

Of course, all information you provide us will be kept confidential. We will have a decision on your application within two days after receiving this additional information. Thank you for your cooperation.

Example Letter #2

Thank you for your recent request for credit with Doe Corporation. In reviewing your application, we have found that some additional information is needed to complete the approval process. We assure you that all information obtained to evaluate your qualification for credit will be kept confidential.

Please send us the information requested on the attached form as soon as possible, so we can finish processing your request without delay. We look forward to doing business with you.

Example Letter #3

Thank you for your interest in store credit at Doe's. In order to process your application we ask that you complete and sign the enclosed forms authorizing a standard check on your credit history. Of course this information will be used only to evaluate your credit application with Doe's. As soon as we receive the completed forms we will fax the application to our credit company. You should know the results within one week. Thank you again for your cooperation.

Example Letter #4

We were pleased to receive your application for a credit line and have begun processing it. Due to an oversight on my part, however, you did not receive all the necessary paperwork. Enclosed are two additional standard forms for you to sign and submit to our credit department. You may rest easy knowing your credit information is kept in strictest confidence. I apologize for the delay, and feel confident that as soon as we have the additional information, we will be able to extend you a fine credit line.

Write Your Letter Step-by-Step

1 Thank the applicant for expressing interest in your company or in obtaining a credit account from your company.

Sample Sentences for Step 1

• We received your credit application on June 30. On behalf of the Doe Corporation, I want to thank you for your interest in opening an account with our company.
• Thank you for your recent purchase.
• Thank you for sending us your credit application. We appreciate your confidence in our services.
• Thank you for personally delivering your credit application to my office last week. I enjoyed our visit.
• We received your application on February 20, and began processing your request that day.
• We appreciate your interest in opening a charge account with the Doe Corporation.
• Thank you for showing an interest in our company by applying for a charge account.
• We appreciate your letter asking for a $3,000 credit limit, which accompanied your order this month.
• Thank you for expressing interest in opening a charge account with Doe's.
• We were pleased to receive your letter on May 9, requesting a credit account for your company.
• Thank you for deciding to purchase your building supplies from Doe Lumber.

Sample Phrases for Step 1

• a charge account with
• applied for a line of credit
• appreciate your confidence in
• are pleased you are interested in
• expressed an interest in
• expressing interest in
• for your interest in opening a
• for applying for a
• greatly appreciate your application for
• inquired about establishing
• look forward to serving you
• obtaining credit with
• on behalf of
• opening a charge account with
• received your credit application
• request for a credit account
• sending us your credit application
• thank you for
• to establish a credit account with
• want to thank you for
• your recent order
• your letter requesting
• your interest in
• your recent enquiry about

2 Politely ask for the additional information. Let the applicant know that your request is standard.

Sample Sentences for Step 2

• In order to finish processing your credit application, we need you to complete and return the enclosed forms.
• We have reviewed your credit application for an account with the Doe Corporation. In order to complete the process, however, we need a little more information. Please send the names and addresses of two current references who can comment on your financial reliability.
• In order to help us process your information quickly, please send us the following information:
• According to company policy, we must ask you to complete the attached forms before we can consider a credit account for you.
• I neglected to ask you to fill out and sign the enclosed financial disclosure form. We must have it on file before we can grant you the credit line you have requested.
• To extend your credit line, I need additional information.

Sample Phrases for Step 2

• a routine credit investigation
• according to company policy
• as is customary
• as soon as we receive
• as soon as we have this information
• ask you to complete
• before we can grant you
• company policy dictates that
• complete the enclosed form
• fill out and sign
• further information regarding your
• in order to process your
• must have this on file
• need you to complete
• need to update your
• need more information
• neglected to ask you to
• once we have received
• our usual procedure is
• please furnish us with
• please send us your latest
• please send me a copy of
• return the enclosed forms
• supply the required information
• use the enclosed forms
• will notify you within

3 Assure the applicant that you will keep the information confidential.

Sample Sentences for Step 3

• I assure you that we are required to keep confidential all information you may give us.
• All information you send will be kept in strictest confidence.
• Of course, the financial reports you provide will remain confidential.
• You have our assurance that only our financial representatives will review this information.
• All information you send will be held in strict confidence.
• Naturally, we will handle this information in strict confidence.
• In accordance with company policy, our financial department will respect your privacy and treat this information as confidential.
• The information you give us will be used solely for the purpose of establishing your credit account with the Doe Corporation.

Sample Phrases for Step 3

• all information you send
• assure you that
• confidential work file
• for our internal use only
• have our assurance that
• in accordance with company policy
• information will be handled only by
• information will be used only for
• is strictly for the purpose of
• keep all information confidential
• kept in strictest confidence
• only our financial representatives
• respect your privacy
• solely for the purpose of
• this information is confidential
• will view this information
• will be treated in confidence
• will remain confidential

4 Thank the reader for his or her cooperation and ask for a prompt reply.

Sample Sentences for Step 4

• As soon as we receive this information, we can process your application.
• Thank you for your cooperation. We will begin our final evaluation of your credit request as soon as we receive the information.
• We look forward to your prompt reply. If you have any questions concerning your application, please call us at 555-5555.
• Thank you for your interest in the Doe Corporation and for your cooperation in providing the necessary information. We look forward to welcoming you as a new customer.
• We appreciate your desire to open an account with the Doe Corporation and we hope to hear from you soon.
• We are pleased to help you open a charge account and would appreciate your prompt reply.

Sample Phrases for Step 4

• appreciate your cooperation
• as soon as possible
• begin our final evaluation
• concerning your application for
• continue processing your
• eager to expedite your
• for your cooperation
• hope to hear from you soon
• if there is anything we can do to
• if you have any questions
• look forward to
• please call us at
• return the form to me
• return it to us within
• send the necessary information
• serve you promptly and efficiently
• welcome you as a new customer
• would appreciate your prompt reply
• would be pleased to
• will attend to your request
• your quick response will facilitate

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How Credit Reference Letters Work

Tips and Samples to Help You Get Approved

What Is a Credit Reference Letter?

Why you need a credit reference letter, how to get a reference letter, what should be included, other methods to validate credit, who can provide a reference, sample credit reference letters, personal or character references.

When you’re a brand-new customer with a supplier, lender, or utility provider they have no idea whether you pay your bills on time. As a result, it’s risky for them to provide anything on credit (without requiring payment upfront).

Credit reference letters might help you get approved for service or secure the best terms on the loan you applied for.

A credit reference letter is a document that describes your payment history with a business you've worked with previously. Recipients use the letter to learn more about your finances and decide if it's appropriate to offer you credit.

Letters (like the samples below) typically provide details about your account, such as the length and the type of services you've used. If you’re behind on payments or make a habit of paying late, the letter should include that information.

References letters come from your previous—or ongoing—service providers and go to your new (prospective) service provider.

A credit reference letter can help you get approved for services based on your history with other service providers. The reference provider vouches for you, making the letter recipient more comfortable with extending credit. These letters might also be called letters of good credit or “good standing.”

Credit Reports vs. Reference Letters

Your personal credit reports are similar to a credit reference letter, but there are significant differences.

Credit reports contain information from lenders, public records, and other sources that credit bureaus combine and centralize . The reports are subject to strict consumer-protection laws and can only be used with your permission.

Credit reference letters are more informal, and they go directly from one business to another. If you've ever borrowed money, you probably have credit reporting data available somewhere. Credit reference letters only exist if you ask for one (and the provider agrees to give you one).

What’s more, these letters can help business relationships, while traditional credit scores are primarily related to your personal credit history.

Credit scores and reports are commonly used for consumer loans, but they aren’t the best solution for every situation where you might need credit.

Utility Services

When you sign up for services like gas, water, electricity, or phone service, you might need to provide a letter before activation. Those providers often demand that you make a deposit before providing services, but it may be possible to get the deposit requirement waived if you can show that you have a history of paying similar service providers on time.

Business Loans and Suppliers

Traditional credit scores like  the FICO credit score  help you with consumer loans, but your business may operate with a different credit profile. Companies also have credit scores if they have used credit for financing—Dunn & Bradstreet, Experian and Equifax all provide credit scoring for businesses.

Still, suppliers may be willing to extend credit, such as 30- or 60-day payment terms, based on other vendors' favorable references—the larger and more reputable your references, the better.

If you can use credit to help delay payments, you maintain more cash in your accounts to help you fund your business operations.

Insufficient Credit

You might not qualify for loans that use mainstream credit scores (like a FICO score), but alternative forms of credit can help you get approved. Perhaps you have not yet  established a solid credit history , or your credit scores are too low to qualify for specific programs.

In those cases, a credit reference letter may help. For example, some lenders let you borrow for a home purchase  with manual underwriting  and satisfactory credit references.

Receiving a reference letter isn't a complicated process as long as you take a few steps:

• Verify the requirements : It helps to understand what the new lender needs to know. In some cases, lenders and service providers have a template that your references can fill in.
• Request the letter : Contact your existing provider and ask for a reference letter. Provide any templates or instructions you receive from the letter requester, and ask how long to wait for the completed letter.
• Provide written authorization : To release details about your account, the letter writer typically needs your written permission.

Lenders, service providers, and suppliers are not obligated to provide a credit reference on your behalf—it’s best to ask nicely since they’re doing you a favor.

Unless the recipient provides a form, ask the letter writer to use their official letterhead. The essential elements are typically:

• Length of relationship : How long you have had a financial relationship with the letter writer.
• Payment history : Whether you pay on time, if you're behind on payments or if there have been any late payments during the past 12 months.

Additional details are often helpful, and some recipients specifically ask for the following information:

• Type of service : Products and services you've used or purchased, such as a  line of credit , residential electricity, or inventory.
• Terms of credit : Payment periods, length of the loan, etc.
• Address of service : Especially for utilities, the address and type of service are relevant.
• Account numbers : Account numbers make it easier to track and verify details.
• Typical payment amounts : New service providers might want to know if you’re accustomed to making large payments.
• The overall total payment : The amount you've paid over the life of your financial relationship.

A reference letter should stick to the requested information. The letter writer shouldn't say that you’re a great person or you’ve been a valuable partner (although that could happen).

Businesses are hesitant to say more than they need to. If they say “there's no risk” in offering you credit, they risk leading somebody astray—with potential consequences.

If you’re writing a credit reference letter for somebody, provide accurate information, and avoid predictions and statements that you can’t back up with facts.

If a service provider doesn’t accommodate your request, there may be other ways to document your payment history.

If you can’t get the credit references you need, there may be different ways to demonstrate financial stability or get the approval you need:

• Show proof of income : Use pay stubs and tax returns (possibly with a letter from your tax preparer) to document your earnings.
• Document your assets : You might be able to use any valuable assets as collateral.
• Use your credit : Your credit might help you qualify for business loans and other forms of business credit. Some lenders require a  personal guarantee on business loans to guarantee repayment.
• Show your statements : Provide statements showing a consistent history of on-time payments.
• Make a deposit : Sometimes, a large deposit is your only option. You may be able to get the deposit returned or credited to your account after a time.
• Use a cosigner :  A cosigner can help  you get approved for a loan or get utilities because they take on the risk of paying if you can't.

Your new lender or service provider determines which references are acceptable. You might need to use the same reference type: An electric company might want a letter from your previous electricity provider. However, you may be able to draw from several sources:

• Utilities like gas, water, sewer, electricity, and trash
• Communication providers such as phone, internet, cable, and satellite
• Lenders (auto loans, home loans, and more)
• Suppliers to your business
• Insurance companies that you pay regular premiums to
• Landlords and leasing companies
• Gyms and other subscription services

Letters don’t need to be lengthy or well-written. All that matters is that you include the requested facts.

XYZ Company has been a customer since 2008. During that time, the company has made payments in full and on time. We do not have any record of late payments or other outstanding demands.

Jane Doe has been a customer since 2008, purchasing supplies on 30-day payment terms. Since that time, she has made payments totaling $189,537. She has never made a late payment, nor have we ever suspended her account for non-payment.

ABC Company has a line of credit for up to $200,000. The current loan balance on that line is $8,542. As of this writing, all payments have been received on time and in full. We do not show any late payments on the account.

A credit reference letter is different from a personal or character reference. Some lenders, particularly in  subprime auto loan markets , ask for those references. But a personal reference does not describe your payment history—they say you’re responsible and you should get the loan.

Since you get to pick and choose your personal references, you’re likely to use people who you know will speak favorably about you. However, you don’t get to choose the electric company in your area, so that’s typically a more reliable source of information for someone that is considering extending credit to you.

Federal Trade Commission. " Credit and Your Consumer Rights ."

SoCalGas. " Why Am I Being Asked for a Letter of Credit? "

Quicken Loans. " FHA Loan Credit Score Requirements for 2021 ."

Department of Agriculture. " Applicant Reference Letter (A Request for Credit Reference) ," Page 1.

Small Business Administration. " Small Business Administration § 120.172 ," Page 237.

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What Is a Letter of Credit?

How a letter of credit works, types of letters of credit, example of a letter of credit.

• Applying for a Letter of Credit
• Advantages and Disadvantages
• Letter of Credit FAQs

The Bottom Line

• Personal Finance

Letter of Credit: What It Is, Examples, and How One Is Used

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. If the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. It may be offered as a facility (financial assistance that is essentially a loan).

Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade to protect buyers and sellers.

Key Takeaways

• A letter of credit is a document sent from a bank or financial institution that guarantees that a seller will receive a buyer’s payment on time and for the full amount.
• Letters of credit are often used within the international trade industry.
• There are many different letters of credit, including one called a revolving letter of credit.
• Banks collect a fee for issuing a letter of credit.

Jessica Olah / Investopedia

Buyers of major purchases may need a letter of credit to assure the seller that the payment will be made. A bank issues a letter of credit to guarantee the payment to the seller, essentially assuming the responsibility of ensuring the seller is paid. A buyer must prove to the bank that they have enough assets or a sufficient line of credit to pay before the bank will guarantee the payment to the seller.

Banks typically require a pledge of securities or cash as collateral for issuing a letter of credit.

Because a letter of credit is typically a negotiable instrument , the issuing bank pays the beneficiary or any bank nominated by the beneficiary. If a letter of credit is transferable , the beneficiary may assign another entity , such as a corporate parent or a third party, the right to draw.

The International Chamber of Commerce’s Uniform Customs and Practice for Documentary Credits oversees letters of credit used in international transactions.

How Much a Letter of Credit Costs

Banks usually charge a fee for a letter of credit, which can be a percentage of the total credit they are backing. The cost of a letter of credit will vary by bank and the size of the letter of credit. For example, the bank may charge 0.75% of the amount that it's guaranteeing.

Fees can also depend on the type of letter. In an import-export situation, an unconfirmed letter of credit is less costly. A confirmed letter of credit may have higher fees attached based on the issuing bank's credit strength.

The types of letters of credit include a commercial letter of credit, a revolving letter of credit, a traveler’s letter of credit, a confirmed letter of credit, and a standby letter of credit. International trade will also sometimes use an unsecured— red clause —letter of credit.

Commercial Letter of Credit

This is a direct payment method in which the issuing bank makes the payments to the beneficiary. In contrast, a standby letter of credit is a secondary payment method in which the bank pays the beneficiary only when the holder cannot.

Revolving Letter of Credit

This kind of letter allows a customer to make any number of draws within a certain limit during a specific period. It can be useful if there are frequent merchandise shipments, for example, and you don't want to redraft or edit letters of credit each time.

Traveler’s Letter of Credit

For those going abroad, this letter will guarantee that issuing banks will honor drafts made at certain foreign banks.

Confirmed Letter of Credit

A confirmed letter of credit involves a bank other than the issuing bank guaranteeing the letter of credit. The second bank is the confirming bank, typically the seller’s bank. The confirming bank ensures payment under the letter of credit if the holder and the issuing bank default . The issuing bank in international transactions typically requests this arrangement.

Standby Letter of Credit

A standby letter of credit provides payment if something does not occur, which is the opposite of how other types of letters of credit are structured. So, instead of facilitating a transaction with funding, a standby letter of credit is like an insurance contract. It protects and compensates one party (the beneficiary) if the other party named in the agreement fails to perform the stated duty or meets certain service level agreements outlined in the letter of credit.

Citibank offers letters of credit for buyers in Latin America, Africa, Eastern Europe, Asia, and the Middle East, who may have difficulty obtaining international credit on their own. Citibank’s letters of credit help exporters minimize the importer’s country risk and the issuing bank’s commercial credit risk.

Letters of credit are typically provided within two business days, guaranteeing payment by the confirming Citibank branch. This benefit is especially valuable when a client is located in a potentially unstable economic environment.

How to Apply for a Letter of Credit

Letters of Credit are best prepared by trained professionals, as mistakes in the detailed documents required can lead to payment delays and fees. Due to industry variations and types of letters of credit, each may be approached differently.

Here's an import-export example.

• The importer's bank credit must satisfy the exporter and their bank. The exporter and importer complete a sales agreement.
• Using the sales agreement's terms and conditions, the importer's bank drafts the letter of credit; this letter is sent to the exporter's bank. The exporter's bank reviews the letter of credit and sends it to the exporter after approval.
• The exporter ships the goods as the letter of credit describes. Any required documentation is submitted to the exporter's bank.
• The exporter's bank reviews documentation to ensure letter of credit terms and conditions were met. If approved, the exporter's bank submits documents to the importer's bank.
• The importer's bank sends payment to the exporter's bank. The importer can now claim the goods sent.

Advantages and Disadvantages of a Letter of Credit

Obtaining letters of credit may be necessary in certain situations. However, like anything else related to banking, trade, and business, there are some pros and cons to acknowledge.

Can create security and build mutual trust for buyers and sellers in trade transactions.

Makes it easier to define the specifics of when and how transactions are to be completed between involved parties.

Letters of credit can be personalized with terms that are tailored to the circumstances of each transaction.

Can make the transfer of funds more efficient and streamlined.

Buyers typically bear the costs of obtaining a letter of credit.

Letters of credit may not cover every detail of the transaction, potentially leaving room for error.

Establishing a letter of credit may be tedious or time-consuming for all parties involved.

The terms of a letter of credit may not account for unexpected changes in the political or economic landscape.

How Does a Letter of Credit Work?

Often, in international trade, a letter of credit is used to signify that a payment will be made to the seller on time and in full, as guaranteed by a bank or financial institution. After sending a letter of credit, the bank will charge a fee, typically a percentage of the letter of credit, in addition to requiring collateral from the buyer. Among the various types of letters of credit are a revolving letter of credit, a commercial letter of credit, and a confirmed letter of credit.

What Is an Example of a Letter of Credit?

Consider an exporter in an unstable economic climate, where credit may be more difficult to obtain. A bank could offer a buyer a letter of credit, available within two business days, in which the purchase would be guaranteed by the bank's branch. Because the bank and the exporter have an existing relationship, the bank is knowledgeable of the buyer's creditworthiness , assets, and financial status. 

What Is the Difference Between a Commercial Letter of Credit and a Revolving Letter of Credit?

As one of the most common forms of letters of credit, commercial letters of credit are when the bank makes payment directly to the beneficiary or seller. Revolving letters of credit, by contrast, can be used for multiple payments within a specific time frame. Typically, these are used for businesses that have an ongoing relationship, with the time limit of the arrangement usually spanning one year.

When Does Payment Occur With a Letter of Credit?

A letter of credit is like an escrow account in that payment to the beneficiary only happens when the other party performs a specific act or meets other performance criteria spelled out in the letter of credit agreement.

Letters of credit can play an important part in trade transactions. There are different types of letters of credit that may be used, depending on the circumstances. If you need a letter of credit for a business transaction, your current bank may be the best place to begin your search. However, you may need to expand the net to include larger banks if you maintain accounts at a smaller financial institution.

International Trade Administration. " What Is a Letter of Credit? "

International Chamber of Commerce. “ Global Rules .”

Export-Import Bank of the United States. " To Confirm or Not to Confirm (Letters of Credit) ."

Cornell Law School. " 12 CFR § 208.24 - Letters of credit and acceptances. "

USAID. " Letters of Credit and Trade Finance ," p.106.

FDIC. " Off-Balance Sheet Activities ," p.2

Columbia Bank. " Letters of Credit. "

Citi. “ International Trade .”

Citi. “ Products and Services .”

International Trade Administration. " Letter of Credit. "

International Trade Administration. " Trade Finance Guide ," Page 7.

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Credit Applications

3,000+ Templates & Tools to Help You Start, Run & Grow Your Business

• Business credit card benefits

Business credit card risks

• Choosing the right business card

Application process and requirements

• Business vs. personal credit cards
• Why business credit is important

Types of business credit cards

Choosing business credit cards for llc startups: a 2024 guide.

Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate credit cards to write unbiased product reviews .

• A small business credit card can help you separate personal and corporate finances.
• Business credit cards offer many forms of financial protection and often reward you for spending.
• Read Business Insider's guide to the best small business credit cards for you.

Business credit cards act very similarly to personal credit cards, providing business owners with a secure way to charge and manage purchases for their company.

You'll quickly discover that there are dozens of business credit card options for new LLCs. The best business credit cards make it easier to track and separate business expenses, manage employee spending, and even earn rewards based on your company spending.

Benefits of business credit cards for LLCs

A dedicated business credit card for your LLC can have many benefits. These are some of the best advantages.

Easier expense tracking

You should always separate your personal and business finances , especially for accounting and tax purposes. Your business credit card makes it easy to simultaneously shop for your company as well as your home, as long as you divide your items into two separate purchases at checkout. 

Fraud prevention

Since debit cards link directly to your bank account, an unscrupulous thief or hacker may be able to wipe out your business savings if they get a hold of your company debit card. When you pay with a credit card, however, you'll have an additional layer of protection if your issuer detects fraudulent activity. 

Purchase protection

Many business credit cards offer complimentary purchase protection as a benefit, which can be extremely beneficial if you're outfitting an office with appliances, TVs, computer monitors, and other high-ticket items. Purchase protection is a form of insurance: Your credit card issuer will replace or repair an eligible product free of charge if it's accidentally damaged, stolen, or lost within 90 days of your purchase date.

Benefit limits and qualifications will vary from card to card, so read the fine print to know when you should file a claim. 

While there are many benefits to using a business credit card for your LLC, there are also some risks and downsides to keep in mind. Here are a few things to note before you apply for and begin using a business credit card.

Interest rates

Every credit card will be subject to interest charges if you hold a balance from one month to the next (versus paying off the total balance in full) unless the card also has an introductory 0% APR offer for a period of time. This interest rate is based on factors such as the current federal prime rate and your creditworthiness.

The higher the interest rate on your LLC's credit card, the more you'll pay on your card's balance if you don't pay it off each month. This can easily spiral into paying hundreds, if not thousands, of extra dollars each year in interest charges alone.

Annual fees

Some cards charge annual fees, which is the cost of simply holding that card each year. If you're able to utilize all of the card's benefits and/or earn enough in rewards to compensate for that fee, the card may be worthwhile. However, if you're paying to use a card that doesn't offer much in the way of benefits, or has benefits that don't match your LLC's needs and function, you might be better served with a different card product.

Credit limits 

You may find that, depending on your company's creditworthiness and history, your card is subject to spending limits. Depending on how your LLC spends money, any large purchases you need to make, and whether or not you'll carry a balance over, these limits could affect your ability to use the card when you need it. 

Sometimes, there are also reward limits that will determine the maximum rewards you're able to earn overall or in specific spending categories. It's important to note these limits and compare them to your typical spending habits, as they can easily throttle your potential rewards.

Personal credit

A business credit card can still affect your personal credit in some cases. While most business credit cards are reported to commercial credit bureaus, there are some products that will show up on your personal credit report. Additionally, if you fail to make your payments as promised, many issuers will submit a negative report to your personal credit.

How to choose the right card

With all this information to evaluate, how do you choose the right business credit card for you and your LLC? The answer will be different for everyone. Here are a few considerations to keep in mind that will help you decide. 

Business spending 

Are you using this business credit card for all of your company's spending, or just spending in certain categories? You'll also want to consider where your business spends the bulk of its money each month.

If your spending categories are all over the place, a cash back business credit card that offers rewards on every dollar spent might make the most sense. But if most of your spending comes from airfare, hotel stays, and rental cars, a travel business credit card will help you maximize rewards and protections. 

Comparing rewards

Some business credit cards offer rewards on every dollar you spend, while others will only offer rewards in certain spending categories. Some rewards credit cards allow you to cash in your earnings for travel, gift cards, or new purchases while others only allow statement credits. The right card for you depends on how your LLC spends money each month, how much you can earn in rewards, and how you want to use those rewards.

Employee credit cards

Which of your employees is authorized to use your business credit card? Will you need multiple cards for other business partners, or for contractors such as your accountant or CPA?

Some business credit cards make it easy to issue and manage employee credit cards for authorized users, even setting individual spending limits for each card. You may even be able to find one that gives you the card management tools you need and offers free cards for other users.

Not all annual fee credit cards are bad, and in some cases the rewards and benefits you earn more than make up for the cost of a card. However, it's important to weigh a card's annual fee against the value of benefits you'll actually use before applying, to make sure you're picking the right product. In some cases, finding a no-annual-fee business credit card makes the most sense for your LLC.

Welcome offers

A welcome offer, also called a sign-up bonus, is a great way to earn a large amount of points or miles on a new card in exchange for meeting a certain spending threshold in the first few months. If you already have big business purchases to make, finding a card with an enticing sign-up bonus can be a great way to boost your rewards and even compensate for a card's annual fee.

The process of qualifying for a business credit card is slightly different from qualifying for a personal credit card.

Documentation needed for application

Each issuer's requirements will vary, but you'll typically need to provide the following documents for a business credit card application:

• Required business documents, such as your LLC's formation paperwork, previous tax returns, and EIN
• Proof of a business bank account, which shows that your company is separate from your personal finances
• Information about your business, including its industry, operations, and purpose

You should also be prepared to have your personal credit pulled, especially if your business is newer or doesn't have a strong enough credit history to stand on its own. 

Read more: How to get a business credit card with your Employer Identification Number (EIN) only

Business credit cards vs. personal credit cards

Building credit with LLC business cards can be easy if you start off on the right foot. There are a few important distinctions to make between business credit cards and personal credit cards, even though the two have some overlap. 

Similarities between business and personal credit cards

• Both business and personal credit cards can be reported to the credit bureaus and may affect your credit score.
• Personal and business credit cards will typically be subject to a credit limit, which dictates how much you can charge to the card at any given time.
• Fees are common on both business and personal credit cards, though there are no annual fee credit cards available for both individuals and businesses.
• If you hold a balance on either a business or personal credit card, your account may be subject to finance charges. Your credit card's interest rate depends on factors such as your credit history, credit score, and current benchmark rates.
• Both personal and business credit cards may offer rewards on spending such as miles, points, or cash back. Rewards may be available on all spending or only in certain categories, depending on the card.

Differences between business and personal credit cards

• Business credit cards are only available to those with a verifiable business, while personal credit cards are available to any eligible consumers who qualify.
• A business credit card is intended for company spending by the business owner and any authorized partners or employees. Personal credit cards, by contrast, are only intended for an individual's own personal spending (or that of their authorized users).
• The rewards programs on a business credit card are usually structured to include typical business spending (like advertising, office supplies, and postage), while personal rewards credit card programs may be tailored to individual spending habits (like gas, groceries, and streaming services).

Why building business credit is important for your LLC

The activity on most business credit cards will be reported to the commercial credit bureaus. Like a personal credit report, your business credit is an important factor that can impact your company's creditworthiness and future activity.

Establishing and maintaining a good business credit score is imperative if you want to:

• Take out a loan or line of credit for your LLC in the future
• Increase your company's credit card limits for more flexibility and security
• Build your company's financial strength rating
• Earn more favorable terms and arrangements with vendors and suppliers
• Qualify for lower business insurance premiums
• Avoid being asked to personally secure business debt, since your business credit will be strong enough to stand on its own

When shopping around, you'll find that there are a few types of business credit cards available today from each of the major card issuers. The right one for you and your LLC depends on how you spend, how much you spend, who will be using the card, your business history, and how you prefer to earn rewards (if any).

Not all business credit cards are the same, nor do they offer the same features and benefits. Most business credit cards fall within the following categories:

• Cash back business credit cards — Cash back business credit cards reward users on monthly spending with a low percentage return on every dollar spent.
• Rewards business credit cards — As the name suggests, rewards business credit cards earn incentives on overall spending or spending in certain categories, which is typically earned in the form of miles or points that can be redeemed for statement credit, travel, purchases, gift cards, and more.
• Travel business credit cards — Travel business credit cards either offer travel-related benefits and protections as a standard perk, earn rewards on travel-related business spending, or both. 
• Secured business credit cards — If you're unable to qualify for a typical business credit card, a secured business credit card can be a great way to get your foot in the door, help your LLC get approved for a business credit card in the future, and begin building your business credit in exchange for a secured cash deposit. 

Yes, a new business can qualify for a business credit card . You'll typically need to have strong personal credit and it helps if you have documents proving that you own your small business. 

The Ink Business Preferred® Credit Card is Business Insider's choice for most LLC startups, topping our list of the best business credit cards .

Most issuers check the applicant's personal credit score as part of the qualification process for small business credit cards. In most cases, your credit score will only take a small hit, and the hard inquiry will drop off with time. 

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

**Enrollment required.

For rates and fees of the US Bank Triple Cash Rewards Card, please click here.

† The information related to the Capital One Spark Miles Select for Business has been collected by Business Insider and has not been reviewed by the issuer.

For rates and fees of the American Express Blue Business Cash™ Card, please click here.

• Main content

• How Liquid is Your Letter of Credit?

[co-author: Marina Ferguson - Articling Student]

Other than cash, a standby letter of credit (LoC) is generally considered the most liquid form of performance security. While beneficiaries generally believe drawing on an LoC should be a relatively simple process, many do not understand the extent to which the counterparty could try to stop you. This issue was addressed in Pacific Atlantic Pipeline Construction v. Coastal Gaslink Pipeline Ltd (2023) ABKB 736 .

Pacific Atlantic Pipeline Construction Ltd v Coastal Gaslink Pipeline Ltd, 2023 ABKB 736

In this case, Coastal Gaslink Ltd. (CGL) contracted with Pacific Atlantic Pipeline Construction Ltd. (PAPC) to construct portions of the coastal gaslink pipeline project (Project). During the Project, disputes arose in connection with the performance of PAPC's work and CGL ultimately terminated the contract and arbitration proceedings were commenced.

In connection with the dispute, CGL sought to draw-down on an LoC provided by PAPC as contract security. However, PAPC applied to the Court for an interim injunction in an attempt to stop CGL from calling on the LoC until the conclusion of the arbitration process.

Despite there being no prerequisite conditions to calling on the letter of credit in the contract, PAPC made several arguments in support of their position that CGL should not be permitted to call on the LoC pending resolution of the arbitration. These arguments included:

• CGL had stated that they did not want to put PAPC out of business by calling on the LoC. PAPC argued that these statements created an unenforceable verbal collateral contract; and
• That drawing on the LoC constituted a breach of CGL's duty of honest performance because:

a. CGL was required to use discretion when drawing on the LoC to ensure it aligned with the "purposes of the contract", where the purpose of the contract was paying for and completing construction work and the work had been substantially completed by the time CGL called on the letter of credit; and

b. CGL’s actual goal in drawing on the LoC was to gain leverage during the arbitration and not for a legitimate purpose.

Although not specifically identified by the Court, the three-part test to determine whether or not to grant an interim injunction includes: (1) is there a serious issue to be tried? (2) would the applicable suffer irreparable harm that cannot be compensated in damages if an injunction is not granted? and (3) does the balance of convenience favor granting an injunction?

Here, the Court noted that the PAPC must first prove a strong prima facie case that drawing on the LoC would violate a contractual obligation owed by CGL. For the following reasons, the Court concluded that PAPC failed to meet this requirement:

• While PAPC established a strong prima facie case that the CGL's representatives did state that they did want to put the contractors out of business, this was not enough to establish a legally binding contract. As such, PAPC did not establish a prima facie case that a contract was created out of these statements.
• The Court also noted that both parties were sophisticated and had internal policies that required the documentation of agreements. As such, the fact that there was no written agreement or even an email showed that any statements made by CGL were not intended to be relied on by PAPC as a contractual commitment.
• In response to PAPC's argument that CGL has breached its duty of honest performance, the evidence showed that CGL did consider the point in time in which they called on the LoC. However, using the LoC as leverage was not considered a breach of the duty of honest performance as the duty does not stop a contracting party from pursuing their own economic interests. The Court also confirmed that applying the duty of honest performance here would be extending this duty too far.

In conclusion, the Court confirmed that since LoCs are customary in many commercial arrangements, Courts should limit circumstances where an injunction can be used to stop a beneficiary from enforcing their rights. The Court also reiterated the necessity for a strong prima facie case to obtain an interim injunction and since the court found that PAPC was unable to demonstrate one, PAPC’s application was denied.

Interestingly, despite denying PAPC's application, and after the oral hearing of the application, the Court did grant an interim injunction until January 8, 2024, since the courts were closed over the holidays and to not otherwise impact PAPC's timely right to file an appeal. The justification for granting this interim injunction is unclear and may create some uncertainty regarding the enforcement of LoCs.

Although PAPC was ultimately unsuccessful in preventing CGL from drawing on the LoC, this decision reinforces that a party may still try to seek an injunction to prevent a beneficiary from drawing on an LoC—particularly when the merits of an underlying dispute have not been determined. However, in such circumstances, this decision confirms that:

• Absent clear contractual pre-conditions, Courts are reluctant to interfere with a beneficiary’s right to call on an LoC;
• Courts should be reluctant to extend the duty of honest performance in these circumstances; and
• Although Court did not grant the interim injunction, it did grant a temporary injunction to allow for an appeal which effectively constitutes an interim, interim injunction. Although the circumstances of this case were unique in this regard (i.e., the application arose during the holidays), this approach could create some uncertainty in similar, future cases.

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Tenant Background Checks and Your Rights

Are you looking for a new place to live or about to renew your lease? If so, you may want to know that a landlord, property manager, or other housing provider may ask a tenant background check company — also called a tenant screening company — to put together a report about you and other members of your household. That’s called a tenant background check, resident screening report, or tenant screening report. Landlords often use these reports to decide whether to rent to you. This article includes information about tenant background checks and your rights related to them.

You can get help if you believe that a background check company or landlord has violated your rights. For example, you can contact a  local fair housing organization , state attorney general,  local legal aid or legal services office , or  other local lawyer .

You can complain to the Department of Housing and Urban Development’s (HUD)  Office of Fair Housing and Equal Opportunity (FHEO) and submit a report to the  Department of Justice (DOJ) if you think a landlord or tenant background check company illegally discriminated against you. You can also complain to the  Federal Trade Commission (FTC) and the  Consumer Financial Protection Bureau (CFPB) , if you think a background check company included errors in your background check or if a landlord did not provide required information about the tenant background check company.

You can find information in this article about

What To Know Before You Apply

If the landlord makes a negative decision, other steps to take, your rights to be free from discrimination.

• Where To Get Help

Additional Information

When filling out an application with a tenant background check requirement, take the following steps to decrease the likelihood of errors and protect your rights:

• Give the landlord your full name — first, middle (if you have one), and last — and date of birth.  This helps the background check company   get information about the right person.   The landlord will probably also ask for your Social Security number, prior addresses, and possibly other information as well.
• Know whether you’ll pay a fee. The landlords for most HUD-subsidized housing (including public housing and project-based Section 8, Section 202, and Section 811 housing) are not allowed to charge you a fee for an application or background check. But most other landlords, including those accepting Section 8 housing choice vouchers, can — and usually do — charge you a fee.

Before you pay an application or background check fee, ask what information the landlord uses to decide whether to rent to you.  The information that landlords might review as part of a tenant background check includes

• your name, Social Security number, date of birth, and current and past addresses
• your work and income history
• the status of your credit cards and other accounts, including payment history
• housing court records, for example, records related to eviction actions
• criminal records, including arrest, charge, and conviction records
• missed rent or other rent-related payments
• whether you’ve filed for bankruptcy or have been sued (whether or not the lawsuit is related to housing)

The tenant background check company might develop and share with the landlord a recommendation or score that they claim will predict what kind of tenant you will be (such as whether you will pay your rent or damage the property).

Under the Fair Credit Reporting Act, tenant background check companies cannot report most negative information — for example, most civil lawsuits and judgments, including housing court cases, and arrest records — after seven years. Bankruptcies can be reported for 10 years. However, there is no time limit for criminal convictions. Other laws, including the Fair Housing Act (FHA) and state or local laws, may have more restrictions on what tenant background check companies can report. FHA restrictions are described in more detail later.

Under the Fair Credit Reporting Act, tenant background check companies are required to take reasonable steps to ensure the information in your report is accurate. Common errors may include

• information that belongs to someone else
• incomplete information, such as how civil or criminal cases or eviction actions were resolved
• duplicate information, such as the same criminal record appearing more than once, suggesting they are separate cases
• outdated information, such as information that is legally too old to be included in a background check
• criminal record or eviction information that was sealed or expunged

A landlord might use a background check, a score, or a recommendation from the background check company to make a negative decision, including

• reject your application
• charge you more for rent
• require you to have a co-signer
• demand you pay a larger security deposit

But you have rights if a landlord makes a negative decision about your application because of something a tenant background check company included in a report. The Fair Credit Reporting Act gives you the right to

• give you the name, address, and phone number of the tenant background check company
• tell you about your rights to dispute inaccurate information and to get a free copy of the report from the background check company if you ask for it within 60 days of the landlord’s notice to you

If they give you the notice orally, ask them if they would be willing to get you a written copy for your records.

Local law may give you more rights related to this type of notice. For example, your city may require that the landlord give you the notice in writing and may require that the landlord include in the notice the specific reason why you were rejected and a summary of the information from the tenant background check company that the landlord relied on.

• Get a copy of the tenant background check. You can ask the landlord if they would be willing to share the tenant background check report with you. But even if the landlord refuses, the background check company must give you a free copy of the report if you request it within 60 days of the adverse action notice. You may not see any score in the report you get from the tenant background check company, but the report must include the information any score or recommendation is based on.
• Dispute any errors on your report.  To fix any errors, contact the background check company and tell them about the errors. Provide copies of any supporting documentation you have with your request. For example, if your report has an error in your criminal history or records from when you were evicted or sued over a housing or other issue, gather any paperwork showing how the action was resolved and provide it as part of your dispute. Let the landlord know about your dispute. For more information, check out  Disputing Errors on Your Tenant Background Check Report .
• Tenant background check   companies must investigate your dispute within 30 days.  The background check company must also tell you the results of the investigation in writing.   If the company makes a correction to your report, give the landlord an updated report or ask the background check company to send it to the landlord.

Errors by tenant background check companies can hurt your chances to secure housing. Take the following steps before applying for housing:

• Check your credit report . Get your free credit report and  fix any errors . To get your annual free credit report from the three major credit bureaus, visit  AnnualCreditReport.com or call 1-877-322-8228. You don’t have to buy anything or pay to fix errors. And   if you have negative but correct information on your credit report, start working to  fix your credit with steps you can take yourself — without paying anyone.
• If the court records look wrong or incomplete, you may be able to contact the court and get the court to correct any issues.
• You may be able to get your previous landlord to submit updated or correct information to the court along with a request to the court to update or correct its records. Making this request to the landlord in writing may increase the chances of getting cooperation from your landlord.
• You may want legal assistance to help you clean up your record. Some courts have local self-help centers that can help you. If your local court does not have a self-help center, speak with a local lawyer to discuss your options for correcting or updating information about unpaid rent, rent disputes, or evictions.  Law Help is a program of  Pro Bono Net , a national nonprofit to help people without lawyers understand their rights and connect to help in their local community.  Check their directory of free or lower cost legal help in your state.
• Seal your records if possible . Check to see if your city or state lets people with criminal or housing court records seal or expunge them (expunging is a way to remove court case information from law enforcement or public records).

In some instances, tenant background checks can lead to illegal discrimination, even if there is no factual error in the report. The Fair Housing Act makes it illegal for tenant background check companies and landlords to discriminate against you because of race, national origin, color, sex (which includes gender identity and sexual orientation), religion, disability, or familial status (which includes persons who have children under 18, who are in the process of obtaining legal custody of children under 18, or who are pregnant). 

A landlord cannot reject your application or treat you differently than other applicants or tenants because of any of these characteristics. For example, if you are Black and get rejected based on your criminal record, but a white applicant with a similar criminal record is accepted, the landlord may be violating your rights under the Fair Housing Act because of race. As another example, if at first the landlord says they do not perform credit checks, but after the landlord learns you are gay, you are told a credit check is required, the landlord may be violating your rights under the Fair Housing Act because of sex.

• A tenant background check company’s or landlord’s action can also be illegal if it uses or encourages the use of irrelevant or unnecessary information to deny you housing, and this negatively affects some groups more than others. This may be discrimination even if the tenant background check company or landlord does not intend to discriminate. You can learn more about how the Fair Housing Act applies to the use of criminal history  here .
• The FHA also requires that landlords make  reasonable accommodations for people with disabilities. A reasonable accommodation is a change, exception, or adjustment to a rule, policy, practice, or service if that accommodation may be necessary for a person with a disability to have an equal opportunity to use and enjoy housing. A landlord’s tenant background check policy that fails to consider a person’s disability or provide a reasonable accommodation may, in some instances, violate the FHA or other civil rights laws.

In addition to the FHA, other federal laws help ensure equal access to housing, services, and activities. They include

• The  Americans with Disabilities Act (ADA) , which prohibits disability-based discrimination in, among other things, access to and use of government activities, programs, and services and access to and use of places of public accommodation (public places and businesses open to the public, such as rental offices, restaurants, hotels, museums, libraries, and parks),
• Section 504 of the Rehabilitation Act , which prohibits disability-based discrimination by a federal agency or any organization that gets federal financial assistance,
• Title VI of the Civil Rights Act , which prohibits discrimination based on race, color, or national origin by any organization that gets financial assistance from any federal agency, and
• Violence Against Women Act (VAWA) , which prohibits discrimination against individuals applying for or living in federally subsidized housing because they are or have been victims of domestic violence, dating violence, sexual assault, or stalking.

Where To Get Help

To correct a tenant background report

You can get additional help if a background check company does not follow the law by responding to your dispute or correcting false information. For example, you can

• Get  legal help .  Contact your state attorney general,  local legal aid or legal services office , or  other local lawyer . If you are a  servicemember , you may wish to also contact your local  Legal Assistance Office .
• Submit a complaint to the CFPB . Your complaint will be shared with the FTC.   The FTC and CFPB enforce the Fair Credit Reporting Act.

If you suspect discrimination

It can be difficult to know for sure if illegal discrimination is happening. But if you think a landlord or a tenant background check company has discriminated, you may consider taking the following steps:

• Keep records of what happened. As soon as possible, write down in detail what happened and when, and who you spoke to.  Back up your notes on your email or other online cloud storage service.
• Get copies of notices. If you’re rejected or get notice of a negative housing decision orally, ask if the landlord will give you the notice in writing, even by email or text.
• Ask for the landlord’s screening criteria or policy in writing. The criteria or policy may be discriminatory. You can consider filing a complaint with HUD and submitting a report to DOJ if you decided not to apply for housing because of the criteria or policy.
• Don’t wait too long before filing a complaint with HUD . A complaint with HUD under the Fair Housing Act must be filed within one year of the discrimination. Some states and localities require filing earlier than one year.
• If you file a timely complaint with HUD, it will investigate your complaint. If HUD determines that there is reasonable cause to believe that discrimination occurred, its lawyers will bring the case on your behalf, for free, before an administrative law judge. Or HUD may refer your case to DOJ, which may bring lawsuits, again for free, on your behalf.
• You do not need a lawyer to file a discrimination complaint with HUD. However, some  local legal aid and legal services offices , civil rights organizations, and  fair housing organizations have lawyers who may be able to advise or represent you.
• Report housing discrimination to DOJ . Under the Fair Housing Act, DOJ may bring a lawsuit where there is a pattern or practice of discrimination. While DOJ determines whether it can file a lawsuit, it may encourage you to file a complaint with HUD.
• Look into additional protections.  Local legal aid and legal services lawyers, lawyers from   civil rights or fair housing organizations,  other local lawyers , and the state attorney general’s office may also be aware of local protections  that your city or state may offer. If you are applying for federally subsidized housing or a Section 8 voucher, you may have additional protections (for example, under the  Violence Against Women Act ). To find out, contact a  legal aid or legal services lawyer or  HUD . 
• Using Consumer Reports: What Landlords Need To Know
• Understanding Your Credit
• Disputing Errors on Your Tenant Background Check Report
• Disputing Errors on Your Credit Report
• Rental Listing Scams
• Submit a report to the FTC in English at  ReportFraud.ftc.gov or in Spanish at ReporteFraude.ftc.gov . To submit a report in other languages, call (877) 382-4357 and press 3 to speak to an interpreter in your language. Lines open from 9-5 ET.
• What is a tenant screening report?
• What should I do if my rental application is denied due to a tenant screening report?
• How long can eviction actions and lawsuits stay on my tenant screening record?
• Submit a complaint online to the CFPB. Or call us at (855) 411-2372 | TTY/TDD: (855) 729-2372 from 8 a.m. to 8 p.m. ET, Monday through Friday (except federal holidays) Help by phone is available in more than 180 languages.
• How to file a discrimination complaint with HUD  (including  in another language and if you have disability-related needs)
• Submit a complaint online to HUD . Or call us at 1-800-669-9777, 1-800-877-8339, 1-800-877-8339 (TTY) or contact  your local HUD office
• How the Fair Housing Act applies to the use of criminal history
• Reasonable Accommodations under the Fair Housing Act
• Assessing a Person's Request to have an Animal as a Reasonable Accomodation    
• Fair Housing Act Protections for Persons with Limited English Proficiency
• You can also contact and submit a complaint with your local  Fair Housing Agency
• HUD-approved housing counselors can also help you make housing decisions. Find a counselor  here or by calling 1-800-569-4287 where assistance is available in over 250 languages, or 202-708-1455 (TTY).
• Protections for Servicemembers
• Legal Services for Veterans Programs
• Submit a report online to DOJ . Or call us at 1-855-856-1247 or 202-514-0716 (TTY).

Jointly developed by staff of the Federal Trade Commission, Consumer Financial Protection Bureau, Department of Housing and Urban Development, and Department of Justice.

IRS Employee Retention Credit update — what companies need to know

• Crowell & Moring LLP Follow

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Christopher Gurley is an associate in Crowell & Moring's Los Angeles and Orange County offices, where he practices in the tax group. His practice focuses on both federal and state tax controversy and litigation, and he guides clients through all stages of tax controversies, from Internal Revenue Service audits to administrative appeals, alternative dispute resolution proceedings, and litigation. He can be reached at [email protected].

Carina Federico is a partner in the tax group in the firm's Washington, D.C., office, where she advises on wide-ranging, complex tax issues, including transfer pricing, investment tax credits, research and experimentation credits, and energy credits. She handles tax disputes at all stages, including IRS audits, IRS Appeals, federal district court litigation, tax court litigation, and appellate court litigation across the United States. She can be reached at [email protected].

S. Starling Marshall is a partner in the firm's litigation and tax groups in the firm's New York office. In addition to representing clients in all stages of litigation, she guides clients through complex IRS audits and administrative appeals, provides tax-related advice, conducts internal investigations, and represents individuals and corporate entities in criminal tax matters. She can be reached at [email protected].

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Credit Cards

Top credit card combinations to maximize your rewards

Tamara Aydinyan

Allie Johnson

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Robin Saks Frankel

Published 5:58 a.m. UTC March 25, 2024

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StephanieFrey, Getty Images

Some partnerships are greater than the sum of their parts. Can you imagine Bert without Ernie? Or a jelly sandwich without peanut butter? Although there are plenty of credit cards that can hold a solo place in your wallet, some strategic card couplings can significantly boost your earning potential, allowing you to make the most of your card’s rewards on every purchase. Here are some of our favorite credit card combinations to maximize your rewards and perks. 

Chase Sapphire Reserve® and Chase Freedom Unlimited®  

The $550-annual-fee Chase Sapphire Reserve® card is a traveler’s delight for its high earning rate of 5 points per $1 on flights and 10 points per $1 on hotels and car rentals purchased through Chase Travel℠ after the first $300 is spent on travel purchases annually. Earn 3 points per $1 on other travel and dining and 1 point per $1 on other purchases, its $300 annual travel credit and its 50% points boost for travel redemptions booked through Chase Travel℠. The card also comes with perks like Priority Pass Select lounge access (enrollment required), a $100 statement credit every four years for a Global Entry, TSA PreCheck or NEXUS application fee paid with the card and travel protections that include, primary rental car insurance and lost luggage reimbursement.

The no-annual-fee Chase Freedom Unlimited® is ideal for everyday spending due to its high rewards rate in several household areas. The card earns Chase Freedom Unlimited® . It comes with a 0% intro APR for the first 15 months on purchases and balance transfers, then a variable APR of 20.49% to 29.24%. An intro transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater, applies in the first 60 days. After that, a fee of either $5 or 5% of each transfer applies. It also includes trip interruption and cancellation insurance.

Chase Sapphire Reserve®

Welcome bonus.

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $900 toward travel when you redeem through Chase Travel℠.

Regular APR

Credit score.

Credit Score ranges are based on FICO® credit scoring. This is just one scoring method and a credit card issuer may use another method when considering your application. These are provided as guidelines only and approval is not guaranteed.

Editor’s Take

• Up to $300 annual travel credit and Priority Pass Select lounge access.
• Redeem points for 50% more value to book travel through Chase Travel ℠ .
• Transfer points 1:1 to partners such as United Airlines and World of Hyatt.
• High annual fee.
• Not ideal if you aren’t interested in transferring points.
• May not qualify if you’ve applied for 5 or more credit cards in the last 24 months.

Card Details

• Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $900 toward travel when you redeem through Chase Travel℠.
• $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
• Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
• Get 50% more value when you redeem your points for travel through Chase Travel℠. For example, 60,000 points are worth $900 toward travel.
• 1:1 point transfer to leading airline and hotel loyalty programs
• Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
• Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
• Member FDIC

Why they’re great together

Although it’s marketed as a cash-back card, the Freedom Unlimited turns into an Ultimate Rewards® -earning card when rewards are pooled with the Chase Sapphire Reserve. Together, this high/low pair covers a lot of ground in terms of rewards-earning category bonuses. And when the points earned on the Sapphire Reserve are redeemed for travel through the Chase Travel portal, they’re worth 50% more, making 50,000 points worth $750 when used this way. If points are transferred to one of Chase’s airline or hotel loyalty program partners , the potential for maximized value is even greater.

Not quite sure what to do with an Ultimate Rewards stash? We’ve got you. Here’s some of the best ways to use Chase points

The Platinum Card® from American Express and American Express® Gold Card  

The Platinum Card® from American Express (terms apply, rates & fees ) is a top luxury travel card with an impressive list of perks that includes a lucrative welcome bonus, generous airport lounge access, Marriott Bonvoy and Hilton Honors Gold elite status (enrollment required) and over $1,500 in potential statement credits. With a $250 annual fee, the perks aren’t cheap but if fully maximized, you can get value that exceeds the annual fee. This card earns 5 Membership Rewards® points per $1 for flights booked directly with airlines or with American Express Travel on up to $500,000 per calendar year, 5 points per $1 on prepaid hotels booked with American Express Travel and 1 point per $1 on other purchases — making it a prime candidate to pair with a higher-earning everyday card.

The American Express® Gold Card (terms apply, rates & fees ) is the ultimate dining card with its excellent earning rate of 4 Membership Rewards points per $1 at restaurants, plus takeout and delivery in the U.S., 4 points per $1 at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1 point), 3 points per $1 on flights booked directly with airlines or through American Express travel and 1 point per $1 on other eligible purchases. The card also comes with up to $120 in annual dining statement credits at participating partners (enrollment required) and up to $120 in Uber Cash annually (for purchases in the U.S.; card must be added in Uber account to receive benefit), which can help justify its $250 annual fee.

The Platinum Card® from American Express

Earn 80,000 Membership Rewards® Points after you spend $8,000 on purchases on the Card in your first 6 months of Card Membership.

• Over $1,500 in travel and entertainment credits can offset the annual fee.
• Comprehensive lounge access benefit.
• Generous travel and purchase protections.
• High annual fee and spending requirements.
• Amex’s once-per-lifetime rule limits welcome bonus eligibility.
• Annual statement credits have limited use.
• Earn 80,000 Membership Rewards® Points after you spend $8,000 on purchases on your new Card in your first 6 months of Card Membership. Apply and select your preferred metal Card design: classic Platinum Card®, Platinum x Kehinde Wiley, or Platinum x Julie Mehretu.
• Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
• $200 Hotel Credit: Get up to $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®. The Hotel Collection requires a minimum two-night stay.
• $240 Digital Entertainment Credit: Get up to $20 back in statement credits each month on eligible purchases made with your Platinum Card® on one or more of the following: Disney+, a Disney Bundle, ESPN+, Hulu, The New York Times, Peacock, and The Wall Street Journal. Enrollment required.
• $155 Walmart+ Credit: Cover the cost of a $12.95 monthly Walmart+ membership (subject to auto-renewal) with a statement credit after you pay for Walmart+ each month with your Platinum Card®. Cost includes $12.95 plus applicable local sales tax. Plus Up Benefits are excluded.
• $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Platinum Card®.
• $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status is available to Basic Card Member only. Terms Apply.
• $300 Equinox Credit: Get up to $300 back in statement credits per calendar year on an Equinox membership, or an Equinox club membership (subject to auto-renewal) when you pay with your Platinum Card®. Enrollment required. Visit https://platinum.equinox.com/ to enroll.
• $189 CLEAR® Plus Credit: Breeze through security with CLEAR Plus at 100+ airports, stadiums, and entertainment venues nationwide and get up to $189 back per calendar year on your Membership (subject to auto-renewal) when you use your Platinum Card®. Learn more.
• $100 Global Entry Credit: Receive either a $100 statement credit every 4 years for a Global Entry application fee or a statement credit up to $85 every 4.5 years for a TSA PreCheck® (through a TSA official enrollment provider) application fee, when charged to your Platinum Card®. Card Members approved for Global Entry will also receive access to TSA PreCheck at no additional cost.
• Shop Saks with Platinum: Get up to $100 in statement credits annually for purchases in Saks Fifth Avenue stores or at saks.com on your Platinum Card®. That’s up to $50 in statement credits semi-annually. Enrollment required.
• $300 SoulCycle At-Home Bike Credit: Get a $300 statement credit for the purchase of a SoulCycle at-home bike with your Platinum Card®. An Equinox+ subscription is required to purchase a SoulCycle at-home bike and access SoulCycle content. Must charge full price of bike in one transaction. Shipping available in the contiguous U.S. only. Enrollment Required.
• Unlock access to exclusive reservations and special dining experiences with Global Dining Access by Resy when you add your Platinum Card® to your Resy profile.
• $695 annual fee.
• Terms Apply.

The Amex Platinum Card and Amex Gold Card make an ideal complement for frequent travelers and foodies who want to earn Membership Rewards® points . Each card has its own set of unique category bonuses that team up to cover most routine spending, along with credits and offerings that make keeping both in your wallet worth it. Transfer points to any of Amex’s nearly two dozen airline and hotel partners for the highest value redemptions. 

Citi Premier® Card * The information for the Citi Premier® Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. and Citi Double Cash® Card

The Citi Premier Card covers a lot of bases with one swing, earning 3 ThankYou® points per $1 at restaurants, supermarkets, gas stations, air travel and hotels and 1 point per $1 on all other purchases. Plus, through June 30, 2024, earn 10 ThankYou points per $1 spent on hotels, car rentals and attractions booked on the Citi Travel portal — all for a reasonable annual fee of $95. The fee can even be offset with its annual credit of $100 off a single hotel stay of $500 or more (excluding taxes and fees) booked through the thankyou.com site.

The Citi Double Cash Card is a straightforward card that earns 2% cash back on purchases — 1% when purchases are made and another 1% when they’re paid off, plus, for a limited time, 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24. This no-annual-fee card’s simplicity is its appeal. Although the card is marketed as a cash-back card, rewards are technically issued as Citi ThankYou® points and can be paired with an eligible Citi rewards card.

Citi Double Cash® Card

The information for the Citi Double Cash® Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.

Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening.This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.

• No annual fees.
• Introductory APR period on balance transfers.
• Excellent cash-back rewards.
• Charges foreign transaction fees.
• There’s a balance transfer fee.
• Few additional benefits.
• Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
• Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.
• Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 19.24% – 29.24%, based on your creditworthiness.
• Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
• If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
• There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

The Citi Premier Card and Citi Double Cash Card make a great team as they allow you to earn a minimum of 2 points and maximum of 3 points on all purchases for just one low annual fee. When combined, your Citi ThankYou points can be redeemed for travel and transferred to Citi’s multiple airline and hotel loyalty programs, including Air France-KLM’s Flying Blue and Singapore Airlines’ KrisFlyer.

Before you can pair two cards, you have to get approved for them. Here’s a guide to pre-qualifying for Citi credit cards

Capital One Venture X Rewards Credit Card * The information for the Capital One Venture X Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. and Capital One Savor Cash Rewards Credit Card * The information for the Capital One Savor Cash Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.  

The Capital One Venture X is a hard-hitting premium travel credit card with its $300 annual travel credit for bookings through Capital One Travel, airport lounge access, up to $100 Global Entry or TSA PreCheck application fee reimbursement and 10,000-mile anniversary bonus — all for a lower-than-its-peers $395 annual fee. The card earns 2 miles per $1 on purchases, 5 miles per $1 on flights booked through Capital One Travel and on purchases through Capital One Entertainment and 10 miles per $1 on hotels and rental cars booked via Capital One Travel.

The Capital One Savor Cash Rewards card is ideal for foodies and entertainment lovers, earning 5% cash back on hotels and rental cars booked through Capital One Travel, 4% cash back on all dining, entertainment and popular streaming services, 3% cash back at grocery stores (excluding superstores like Walmart and Target), 8% cash back on Capital One Entertainment purchases and 1% on all other purchases. For a $95 annual fee, this card delivers solid earning potential.

Capital One Venture X Rewards Credit Card

The information for the Capital One Venture X Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.

Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel.

• High reward potential.
• Wide selection of statement credits.
• No foreign transaction fees.
• No hotel or airline-specific benefits.
• Requires excellent credit.
• Annual fee: $395.
• Rewards: 2 miles per $1 on purchases, 5 miles per $1 on flights booked through Capital One Travel and on purchases through Capital One Entertainment and 10 miles per $1 on hotels and rental cars booked via Capital One Travel.
• Welcome bonus: 75,000 miles after spending $4,000 on purchases in the first three months of account opening.
• APR: 19.99% to 29.99% variable APR on purchases and balance transfers .
• Other perks and benefits: No foreign transaction fees, 10,000 mile card ownership anniversary bonus, $300 annual credit reimbursement for travel bookings made through Capital One Travel, $100 Global Entry or TSA PreCheck application reimbursement credit, airport lounge access benefits, cellphone protection benefit, transfer miles to travel and hotel partners, Hertz President’s Circle Status.

The Capital One Venture X and Capital One Savor Cash Rewards cards fit nicely together as the Venture X covers travel benefits and the Savor Cash supercharges your spending with bonus categories not covered by the Venture X. Although the Savor card technically earns cash back, you can combine the rewards earned on the two cards and use them as Capital One miles to reimburse yourself for travel purchases or transfer to Capital One’s multiple loyalty transfer partners for potentially more value.

How many credit cards should you have?

There is no rule or recommended number of credit cards you should have, but there are several factors you should consider before applying for a new card — most importantly: your spending habits, your ability to pay the balances in full, your skill at managing multiple cards, your credit score and which rewards are best for your lifestyle. 

Other ways to pair your credit cards

While the most obvious pairings involve combining complementary credit cards from the same issuer, it can make sense to pair your cards in other ways as well. 

If earning cash back is your goal, pairing cards that have different bonus categories is a great strategy. For example, the aforementioned Citi Double Cash Card with its cash-back rewards (2% cash back on purchases — 1% when purchases are made and another 1% when they’re paid off, plus, for a limited time, 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24) can serve as an everyday card when spending in areas other than the ones that earn higher rewards on the Capital One Savor Cash Rewards card. 

If you’re a frequent flyer of a specific airline or a loyalist of a certain hotel chain, getting cobranded credit cards to complement a broad, transferrable travel rewards card is a way to get benefits that are otherwise for elite status-holders while compiling more points. For example, the Chase Sapphire Reserve allows for Ultimate Rewards points to be transferred to both United Airlines and World of Hyatt. Pairing the card with the United℠ Explorer Card * The information for the United℠ Explorer Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. to get a free first checked bag and priority boarding on United flights or owning The World of Hyatt Credit Card * The information for the The World of Hyatt Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. for the card’s anniversary Category 1-4 free night award can be a winning strategy for the right person.

If your lifestyle aligns with the Amex Platinum’s benefits, like Equinox statement credits (enrollment required) or extensive lounge access, but you’d prefer to earn higher rewards on your hotel stays and restaurant bills, pairing the card with the Chase Sapphire Reserve might be a good choice if you can get enough value to justify the two annual fees. 

Is pairing your credit cards worth it?

Not only is pairing your credit cards worth it, it’s the best way to use credit cards. By intentionally organizing your regular spending on the right cards, you can add value to your life with cash back or travel and benefit from everyday transactions you’d be making anyway.

Frequently asked questions (FAQs)

You should have multiple credit cards that cover your different types of spending, as long as you use your credit cards responsibly and don’t carry a balance.

You can get the most rewards points on a credit card by using the card that offers the highest earnings category bonus for the purchase you are making. Hint: There isn’t one card that’s superior across the board, which is why it’s a good idea to use credit card combinations to maximize earnings. 

Certain credit card issuers have their own rules about credit card limits, but there is generally no known limit on how many credit cards you can apply for. Applying is one thing, but getting approved is another. One of the better known unwritten rules around this is Chase’s 5/24 rule , which means you’ll likely get declined for a Chase card if you’ve opened five or more cards from any issuer in the past two years. In general, it’s best not to apply for too many credit cards in too short a period of time as it can have an adverse effect on your credit and also signal to issuers that you’re a potentially risky applicant.

For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.

Upon enrollment, accessible through the Capital One website or mobile app, eligible cardholders will remain at upgraded status level through December 31, 2024. Please note, enrolling through the normal Hertz Gold Plus Rewards enrollment process (e.g. at Hertz.com) will not automatically detect a cardholder as being eligible for the program and cardholders will not be automatically upgraded to the applicable status tier. Additional terms apply.

For rates and fees for The Platinum Card® from American Express please visit this page .

For rates and fees for the American Express® Gold Card please visit this page .

*The information for the Capital One Savor Cash Rewards Credit Card, Capital One Venture X Rewards Credit Card, Citi Premier® Card, The World of Hyatt Credit Card and United℠ Explorer Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Tamara Aydinyan has been traveling the world with the help of miles and points for over a decade and enjoys teaching others to do the same. When she's not on the move, you can find her in Los Angeles or New York City, or on Instagram @deadlytravel.

Allie is a journalist with a passion for money tips and advice. She's been writing about personal finance since the Great Recession for online publications such as Bankrate, CreditCards.com, MyWalletJoy and ValuePenguin. She's also written personal finance content for Discover, First Horizon Bank, The Hartford, Travelers and Synovus.

Robin Saks Frankel is a credit cards lead editor at USA TODAY Blueprint. Previously, she was a credit cards and personal finance deputy editor for Forbes Advisor. She has also covered credit cards and related content for other national web publications including NerdWallet, Bankrate and HerMoney. She's been featured as a personal finance expert in outlets including CNBC, Business Insider, CBS Marketplace, NASDAQ's Trade Talks and has appeared on or contributed to The New York Times, Fox News, CBS Radio, ABC Radio, NPR, International Business Times and NBC, ABC and CBS TV affiliates nationwide. She holds an M.S. in Business and Economics Journalism from Boston University. Follow her on Twitter at @robinsaks.

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Biden Approves $5.8 Billion in Additional Student Debt Cancellation

The incremental relief brings the canceled total to $143.6 billion for nearly four million Americans.

By Tara Siegel Bernard

The Biden administration continued its effort to extend student debt relief on Thursday, erasing an additional $5.8 billion in federal loans for nearly 78,000 borrowers, including teachers, firefighters and others who largely work in the public sector.

To date, the administration has canceled $143.6 billion in loans for nearly four million borrowers through various actions, fixes and federal relief programs. That’s the largest amount of student debt eliminated since the government began backing loans more than six decades ago, but it’s still far less than President Biden’s initial proposal, which would have canceled up to $400 billion in debt for 43 million borrowers but was blocked by the Supreme Court.

The latest debt erasures apply to government and nonprofit employees in the Public Service Loan Forgiveness program, which can eliminate their balance after 120 payments. The P.S.L.F. program, which was plagued with administrative and other problems, has improved in recent years after the administration made a series of fixes .

“For too long, our nation’s teachers, nurses, social workers, firefighters and other public servants faced logistical troubles and trap doors when they tried to access the debt relief they were entitled to under the law,” Education Secretary Miguel Cardona said.

Since those October 2021, more than 871,000 public service and nonprofit workers have received debt cancellation totaling $62.5 billion; before that, just 7,000 had reached forgiveness since the program was created more than 15 years ago.

Starting next week, borrowers who are set to receive the latest round of debt cancellation through the P.S.L.F. program will receive an email notification from Mr. Biden — a reminder of his administration’s work just eight months before the presidential election.

An additional 380,000 federal borrowers in the P.S.L.F program who are on track to have their loans forgiven in less than two years will receive emails from the president notifying them that they will be eligible for debt cancellation if they continue their public service work within that period.

Many of these borrowers have been helped by programs that tried to address past errors that may have failed to credit individuals for payments. As a result, many borrowers received account adjustments, or additional credits, pushing them closer to the repayment finish line.

Millions of borrowers with certain types of loans are still eligible for some of those adjustments, but they will need to apply to consolidate those loans by April 30 to qualify.

“There are a lot of people who need to consolidate by this deadline to benefit and potentially access life-changing student loan relief,” said Abby Shafroth, co-director of advocacy at the National Consumer Law Center. They include borrowers with privately held loans in the Federal Family and Education Loan , Perkins Loan and Health Education Assistance Loan programs, she added. (People with direct loans or loans held by the Education Department don’t need to do anything to have their payment counts adjusted; it happens automatically.)

Besides P.S.L.F., the administration has extended relief through a variety of other federal relief programs: About 935,500 borrowers were approved for $45.6 billion in debt cancellation through income-driven repayment plans, which base monthly payments on a borrower’s earnings and household size. After a set period of repayment, usually 20 years, any remaining debt is erased.

Another 1.3 million people had $22.5 billion wiped out through the federal borrower defense program, which provides relief to those defrauded by their schools.

The administration’s latest round of completed debt relief comes on the heels of its bungled rollout of the new Free Application for Federal Student Aid, or FAFSA, which was supposed to simplify the process. Instead, technical and other problems have created delays, leaving colleges without student financial information that they need to make aid offers. Students have been left in limbo, unable to make decisions on where they’ll attend college.

Tara Siegel Bernard writes about personal finance, from saving for college to paying for retirement and everything in between. More about Tara Siegel Bernard