One of the things that can make it hard to begin drop shipping is wondering if you can do it without having a good credit history. Many people have this worry, and it might stop them from starting an online store. If you've had problems with your credit before, like spending too much or not paying bills on time, or if you're young and never had a credit card, you might be thinking about whether you can start drop shipping without good credit. The good news is that you definitely can!
But before we dive in, let's talk about the different ways you can pay for drop shipping and how it can even help you improve your credit score. When you're setting up your drop shipping business and working with suppliers, you'll have a few choices for how to pay them.
Ways to Pay for Drop Shipping:
Credit Terms: Some suppliers offer credit terms, which means they give you a certain number of days, like 15 to 45 days, to pay for the products after your customer places an order. This can free up your cash temporarily, but it might come with more requirements and checks on your financial history.
Pre-Pay: The second option is to pre-pay your supplier. This means as soon as a customer orders something from your online store, you pay the supplier and they send the products directly to the customer. This can be a simpler way to handle payments.
Now, let's look at some ways to pay for drop shipping and how they can affect your credit.
Paying Methods for Drop Shipping:
Credit Card: You can use a credit card to pay your suppliers. This is a good option because it allows you to process orders quickly when they come in. It's especially helpful if you have a high-ticket drop shipping business.
Debit Card: Some suppliers might let you use a debit card to pay them. Not all suppliers offer this, but it can be a straightforward way to handle payments.
Dwolla: If your supplier doesn't accept credit or debit cards, you can use Dwolla, an online payment system that's easy to use and has a low fee.
PayPal: While PayPal is an option, it might not be the best choice due to potential payment delays and uncertainties.
Check: Some older suppliers might ask for payment by check, but this is often more complicated and might not have many benefits.
Advantages of Using a Credit Card:
Using a credit card can offer advantages, especially for high-ticket drop shipping. When you spend a significant amount with your suppliers using a credit card, you can accumulate rewards points, cash back, or travel perks. It's a great way to save money and enjoy benefits.
Getting a Credit Card with No Credit:
If you're worried about not having a credit history, don't be! There are credit card options designed for people with limited or no credit history. Some options include:
Discover it Secured Card: This card is solid for building or rebuilding credit, and it doesn't have an annual fee.
Chase Freedom Unlimited Card: This card is good for students and those looking to improve their credit over time. It offers cashback rewards and doesn't have an annual fee.
Capital One Platinum: A straightforward card with no annual fees, recommended for those building credit.
Building Your Credit Quickly:
Once you have your drop shipping business up and running, you can use a secured credit card to rapidly improve your credit score. A secured credit card requires a deposit, and you can use it like a business credit card to make small purchases and pay them off consistently. This can significantly boost your credit score over time.
In conclusion, you can definitely start drop shipping without good credit, and it can even help you build your credit over time. Using payment methods like credit cards, debit cards, or online payment systems, you can manage your business and improve your financial situation.
