Before starting any discussions, we need to understand the basic concepts first. The very first step of credit card processing is Credit Score. High-risk credit card processing is a process for banks and credit lending agencies. It can make them prone to high-risk financial losses. So it is mandatory to check credit scores before proceeding with any such facilities.

What Is A Credit Score?

A credit score ranges between 300-850, which determines the creditworthiness of any consumer. The capability of the borrower to repay debts and the number of accounts owned with the cash flow of repayments helps in evaluating credibility. It determines the interest rates you pay for credit cards and loans and helps lenders decide whether you even get approved for those credit cards and loans in the first place.

A good credit score helps money lenders to evaluate the possibility that the consumer/ borrower will repay on a timely basis. One of the factors influencing credit score is Payment History. It determines the payability of the borrower and plays a vital role in the decision of the lender to offer credit. Money lending entities examine the risk involved with the repaying capacity of the borrower to proceed with funds. Higher credit score attracts potential lenders.

How Is The Credit Score Calculated?

There are mainly five factors evaluated when calculating a credit score:

  • Payment history – 35%
  • The total amount owed – 30%
  • Length of credit history – 15%
  • Types of credit – 10%
  • New credit – 10%

Payment history determines 35% of your credit score, and it refers to how timely you repay your debts affects your credit score the most. The amount of overall debt you carry, the ratio of your balances to your credit limit (also called credit utilization), and the relation of your loan balances to the original loan amount.

The length of credit history determines 15% of your credit score. It considers both the age of your old account and the average age of all your accounts.

Two types of credit accounts exist, revolving accounts and installment loans. Having both types of accounts on your credit report is beneficial as they indicate that you have experience handling various types of credit.

New credit – every time you apply for a new credit, an inquiry gets placed on your credit report showing that you have made a credit-based application. One or two inquiries won’t hurt much, but if there are several inquiries within a short time, it can lower your credit score very much.

How To Improve Credit Score?

The credit score changes when new updates get added to the borrower’s credit report. It can fall or rise depending upon the information. Some points to keep in mind:

  • While managing your credits, always pay attention to your payment due dates. If you are going to be late, do not be late for more than 30 days.
  • Do not open too many accounts in the period of 12 months.
  • Keep credit card balances between 15%-25% of the total credit available.
  • If you plan to make a big purchase, always check your credit score 5-6 months in advance to check for errors and correct them.

How Does Business History Influence Credit Card Processing?

While trying to keep your business or side hustles separate from your finances, it might be overwhelming for you to see your business credit card appear on your credit report. This is because of the high debt or late payments affecting your credit score.

For businesses, it is beneficial to use cards that do not report activities to the consumer credit bureaus to reduce the risk. Some business cards report only to commercial credit bureaus, not consumer credit bureaus.

Credit agencies use various parameters to evaluate your overall credit score. Payment history, any unsettled debts, deadline of payments, missed payment are some of them. When businesses fail to meet the conditions, their credit score decreases and leads to bad credit.

When you miss any payment deadlines, it shows on your credit timeline. The lender will write-off and report it to the credit agencies if you have not settled your payments within 180 days. If you have not paid your unsettled debts over 90 days, you’ll be classified as ‘Sub-Standard,’ which can lower your credit score. If that account stays that way for 12 months, you’ll be classified as ‘Doubtful,’ which might lower your score further.


To avoid such situations, you should always pay your debts on time. Always keep a record of your finances and debts to reduce the risk of missing due dates. You can set monthly reminders for due dates.

Payments should be made on time, but in case of failure to meet deadlines, you should inform the lending agency of the date and reason for such a financial crisis to retain some of your credibility.

If your business card activity appears on your credit report, it will have the same effect as your other cards. If you stop paying your credit card bills, you will be personally responsible for the amount owed.

When banks or credit agencies plan to issue credit cards, they access your credit score to evaluate your financial capabilities. If the credit score is low, they are prone to high-risk credit card losses.

If the business does not make payments on time, does not stay put on deadlines, and has poor financial history, it fails to have a good credit score. If the business has a low credit score, it will eventually lead to bad credit. This can impact the processing of credit cards.

Business credit cards are a reliable way to start building your business credit, as they allow you to demonstrate responsible debt management with relatively small amounts. Of course, when using business cards, always pay back the balance in full each month to increase your credit score as quickly as possible.