HOW TO GET A MERCHANT ACCOUNT WITHOUT A PERFECT CREDIT HISTORY?

Why Does Credit History Affect An Application For Merchant Account?  
Merchants who have less-than-perfect credit histories often find their applications for merchant accounts being rejected. Most of them end up frustrated by this as they do not understand why their credit history is in question when all they are trying to do is to open up a merchant account and not to apply for any loan from the merchant account provider.

When a merchant processes a credit card, funds are transferred from the customer’s credit card company to the merchant account. These funds are transferred from the merchant’s account to the merchant’s stipulated bank account, usually within 2 to 3 days. All these funds transfers are done under the assumption that the merchant has delivered the products or services as the customer wanted or will do as promised. However, if the customer is not satisfied with the purchase or does not receive the purchase, he or she can contest the transaction and issue a chargeback. The merchant is usually given an opportunity to dispute the chargeback. However, if the customer succeeds in his or her claim for the chargeback, the merchant account provider will have to transfer the funds from the merchant’s bank account back into the customer’s credit account.

In cases where the funds in the merchant’s bank account is insufficient, the merchant account provider will have to use own funds to reimburse the customer first, in the hope of receiving the funds from the merchant soon. This is a risk taken by the merchant account provider because there are cases where the merchant is unable to pay the merchant account provider back. And while chargebacks may not be such large amounts, cases of fraud can leave the merchant account provider short of thousands of dollars. This is one of the reasons why merchant’s credit history is considered carefully before his or her application for a merchant account is approved.

Improve Your Credit History
Nevertheless, there is good news too. Firstly, although your credit history is considered when approving your merchant account, it doesn’t carry the same importance as when you apply for a loan. This means that even if your credit history may have a few problems, you still stand a good chance to be approved. However, you will probably have to put in some extra effort if you have very bad credit history.
If all the problems with your credit report have been settled, call up or write to a credit reporting bureau and request for these issues to be removed from your credit history.

If you are in active bankruptcy, wait for a minimum of six months after being discharged to contact a credit reporting bureau to clear and re-establish your credit history.

If you have no credit history, talk to the merchant account provider’s sales representative and query on what other documents or evidence they require to enable you to prove your credit-worthiness.

Once you have taken the above actions to improve your credit history, you stand a better chance at getting your application for a merchant account approved.  

Search For Providers Who Specialize In Working With Merchants With Less-Than-Perfect Credit History

Do not waste your time with providers who may be very stringent with their approval to merchants with poor credit history.

Banks reject more applications for merchant accounts than merchant account providers. This is because banks are not as equipped to handle the chargebacks and fraud as merchant account providers. Since banks are unwilling to take the risk, their application process is far more intensive than a full service merchant account provider’s application process.

There are merchant account providers who specialize in helping merchants with not-so-perfect credit history. Remember to be honest outright about your credit history when applying. Please refer to the following websites to guide you to such merchant account providers:
/credit_card_processing_bad_credit_merchant_account.htm
http://www.instamerchant.com/
http://www.merchant-account-explorer.com/bad-credit-merchant-accounts.php

Please always remember to do a background check on the merchant account provider (regardless of whom you select) before signing any contracts. Better Business Bureau is a good place to start your check.

Refer to this for more reading on merchant account providers for merchants with bad credit:
http://www.webhostingtalk.com/archive/index.php/t-220428.html