How do I open a business bank account if I have a poor credit history?

The simple answer is: yes, you can. 

Having a bad credit score may limit your options as some banks will conduct a credit check as part of their application process. Depending on the bank’s eligibility criteria, this may mean you’re not able to open an account. Typically, high street banks are stricter with regards to who can open an account. 

However, many of the digital-only accounts such as Tide and Starling do not take your credit score into account. Equally, some of the high street banks will offer basic account options for those with bad credit – or, if you’re looking for a no-frills free business bank account. 

In the last decade we’ve seen the emergence of the mobile business bank account. The new brands offering these accounts are sometimes referred to as challenger banks. The likes of Starling Bank, Tide Business, ANNA Money and Monzo are some of the most notable. The key difference to the traditional banks is that they do not have a high street presence. Instead, their banking services are wholly digital meaning you can conduct all your financial affairs using an app or online banking. 

Most importantly for those with a bad credit score, you won’t be subject to a ‘hard’ credit check in order to open an account. This is mainly due to these accounts not offering credit facilities like traditional banks. Let’s have a look at the eligibility criteria:

If you have a poor credit history, whether you have defaults on your credit file or have been made bankrupt, it’s going to make applying for a business bank account difficult – particularly with the traditional high street banks.  

However, a small number of these banks provide basic bank accounts if you’re not eligible for their main business account. This will at least allow you to have an account through which you can deposit/withdraw funds and move money. The list below will help determine the best business bank account for you.

• Natwest Foundation Current Account – Whilst not widely advertised on their website, this Natwest account is specifically designed for businesses with a poor credit history who do not qualify for their main account. For an application pack contact the New Accounts Team on 0800 206 1962.
• Santander Start-up Business Current Account – This basic account is aimed at businesses in their first year of trading. There’s no account fee for the first 18 months, after which you’ll pay £7.50 per month.
• Barclays – According to Money Saving Answers, Barclays are known to be “particularly accommodating” towards current account customers with poor credit who may be looking to open a business bank account. However, this might only be if you have defaults on your credit file not CCJs or bankruptcies.