Can I dropship when I have a bad credit card score?
You can but you shouldn’t use your credit card to dropship when you have a bad credit score. Dropshipping like every business has a risk factor, there is no guarantee that your first store will be successful. More so, the interest rate for a business loan is very high when you use a credit card with a low credit score.
Dropshipping is a low capital entry business, you can save up money to dropship on your own website or even start dropshipping for free on Ecwid or on an e-commerce marketplace platform like Facebook marketplace, Amazon, Ebay etc
A credit card allows you to get a quick loan from the bank to spend money you don’t have. Why this might be tempting, most credit card companies give you a billing circle of 50 days during which you can repay the loan without any interest.
Paying your loan on time also builds up your credit score. A good credit score gives you points, depending on your credit card company, points can be used in getting flight and hotel discounts, getting shopping vouchers and cashbacks etc
Maintaining a good credit score also increases the maximum amount which the bank can loan you.
A good credit score also helps you get a lower interest rates for subsequent loans such as a house loan, school loan, business loan etc
What happens when you don’t pay your loan within your billing circle, is that interest accrues, you’d then have to pay back the debt with interest. Note that, most credit card companies, offers high interest rates with the average rates being 14.54% – 18.26%.
More so, repayment of your loan after the billing cycle lowers your credit score. That means you don’t get any points and you get an increased interest rate on your subsequent loans.
Also having a low credit score decreases the maximum amount which the bank can loan you.
If you already have a low credit score, the interest rate for your business loan becomes higher and there is no guarantee that your store will be profitable enough to repay the loan within the first billing circle.
If unfortunately, you’re unable to pay up that debt on time, you fall into more debt and an even worse credit card score.
Here is a solid advice on what you can do if you wish to start a dropshipping business but have a bad credit score;
- Take our free course on dropshipping to learn how to build a dropshipping business while you try to save up to start your own dropshipping store.
- Learn how to dropship for free on Ecwid This is different from the classic dropshipping our course teaches but it’s a good place to start if you want to quickly set up a store and start dropshipping the free way!
- Dropship on a marketplace platform like Amazon, Facebook marketplace, Ebay etc. This is a lot cheaper to start because this marketplace brings in traffic from their existing users and already has a trust amongst buyers and a good conversation rate.
I hope you find this answer helpful, if you have any other questions, don’t hesitate to leave a comment and I’ll respond shortly.