Can you get a merchant account with bad credit, bankruptcy, or TMF?

Do you have a TMF?

A merchant account is a privilege, not a right. While some business owners think they deserve a merchant account just because they opened a company, others may be worried that there is no way to get approved with their financial background. Bad credit, bankruptcy, and open TMF (terminated merchant file) will all affect your eligibility, but there are some things you can do.

Try to resolve the issue before applying

  • If you owe a past processor money, pay your debt so your TMF can be closed.
  • If you have bad credit, try to increase it by paying off past debt and paying current bills on time.
  • If your bankruptcy was over 7 years ago or has been resolved, obtain the paperwork confirming this.

Seek out a high risk processor. Most processors specialize in either low or high risk accounts. Using a processor who will accept risk for the bank will increase your chances of approval. This will mean a higher discount rate for your account, however, as there is more at stake for the processor.

If you cannot apply with a processor directly you can seek out an agent or a broker office, which will have many relationships with low and high risk banks. This will get you a better chance of finding the right processor with your first application. You will also have more options presented to you, which could allow you to save some money by comparing the offered rates and fees.

Another option is to have someone else within the company sign for the merchant account. If owner #1 has financial problems and owner #2 does not, then owner #2 has a better chance of getting approved at a lower discount rate.


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