Personal Credit Check upon Merchant Account Application

Thorough background check of personal credit is conducted by merchant account providers when applying for a merchant account. This to determine your capacity to pay, establish credit history, predict delinquency, and to determine credit amount to be granted.

Before your merchant account application will get an approval, your credit history will be determined. Although personal credit is not the only determining factor in getting an approved account, yet, this is an integral part of the application process. There are several reasons why a background check on personal credit is mandatory:

Determine your capacity to pay

In case you have a bad personal credit and declared bankruptcy, this is a ground for denying your application. If you don't have the capacity to pay, so there is no reason for the bank to grant the credit. Another instance where your application will be denied is, when you have an existing unpaid account reflected in the collection report.

Establish credit history

The processing bank needs to have a basis to establish worthiness of credit grant. Even a single credit history showing consistent payment is enough to get an approval.

Predict delinquency

Although personal credit does not dictate the chance of approval of a merchant account application, checking it helps predict delinquency of payment in the future. If the bank finds out of the successive delayed payments, your application for merchant account will be disapproved since that would already give them the notion that it might still happen again, should you be given such an account with them.

Determine credit amount

Since a merchant account is a line of credit granted to the seller, the bank should be very careful enough in determining the credit limit. The result of the personal credit check affects the amount of credit to be granted. If you have an average credit rating history, it is still possible to get an approval on your merchant account application, but with minimal credit amount. If your credit rating is good, the processing time would be faster and a higher credit line will be given.