Do merchant account providers check applicants' personal credit?

Yes, merchant account providers check every applicant’s personal credit history, however, your bad credit should not prevent you from getting processing services.

First of all, let me strongly advise you against adding a co-owner exclusively for the purpose of using his or her credit history during the application process. It will create more problems than it will solve. The first issue has to do with trust and for most people adding a relative or a close friend takes care of that. But what happens if something goes wrong? Unfortunately, in business things can and do go wrong more often than not and a co-owner is fully responsible for everything that happens. The potential of harming your relationship with a trusted friend/relative is enormous.

My advice is to apply for a merchant account and provide all required information. Unless you’ve had a bankruptcy during the last seven years, you should be able to obtain payment processing services. Keep in mind that, with the right processing provider, your bad credit will not affect your rates. As long as you get approved, you should get the same rates anyone else gets. The difference in your case is that you may be required to keep a reserve. Reserve is a portion of the monthly revenue from a merchant’s payment card transactions that a merchant account provider may request to hold in an escrow account as an insurance against possible loss from chargebacks and other sources. Used mainly with high-risk merchants, upon satisfactory completion of a predetermined period, reserves are returned to the merchants. In the case of a rolling reserve, a reserve is held every month for a certain period (usually six months). On the following month the first month’s reserve is released to the merchant, and then the second month’s reserve and so on until there is no longer a reserve.

To conclude, your situation is by no means desperate and does not call for desperate measures. Go ahead with the application and it might turn out that it is much easier than you feared.