Do business credit cards affect personal credit score?


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If you’re looking to open a business credit card, don’t expect it to necessarily boost your personal credit score. While some banks report business credit activity to the same credit bureaus that track personal credit history, others only report activity to commercial credit bureaus that track business credit history.

This can seem confusing, especially since many banks require applicants to personally guarantee their business credit cards with their Social Security number. This protects the bank in the event of a default by the card user and is usually required if they do not have a business credit history.

Read on to learn everything you know about how business credit cards work.

How is a business credit card different from a personal card?

Credit reports. The biggest difference between personal and business credit cards is where your credit card activity is reported. In the case of your personal credit cards, your card activity is always reported to the three consumer credit bureaus. Business card activity, on the other hand, is reported to business credit bureaus that specifically track business credit behavior and can be used to generate your unique business credit score. And many business credit cards fall under both personal and business credit bureaus.

Banks will usually only report negative payment history on business cards to consumer credit bureaus, but this varies from bank to bank. If you’re concerned that past payments on a business credit card could affect your personal credit score, contact your bank to ask if they are reporting these payments to the consumer credit bureaus.

Regulations. Another key difference between business and personal credit cards is the way they are regulated. The Credit Cards Act of 2009 provides protections for consumers, including improving disclosures and limiting fees and charges on personal credit cards. These protections do not apply to business credit cards, which could result in higher fees. For example, the American Express® Business Gold card has an annual fee of $ 295 (see rates and fees), which is $ 45 more than its consumer counterpart, the American Express® Gold card (see rates and fees).

Benefits. Finally, because personal and business credit cards are designed for different customers, they offer different benefits. Business credit cards tend to have higher average credit limits than consumer credit cards, according to Experian. Most business credit cards have benefits designed for business needs (for example, cash back rewards on office supplies), while the benefits of personal credit cards are specifically tailored for individuals and families (such as cash back on groceries).

Business credit card Personal credit card
Eligibility based on your business and / or personal credit history Eligibility based on your personal credit history
Reports to commercial credit bureaus and sometimes to consumer credit bureaus Reports to consumer credit bureaus
Higher average credit limits than personal credit cards Lower average credit limits than business credit cards
Benefits designed for businesses Benefits designed for individuals
Less coverage and potentially higher rates and fees than personal credit cards More coverage and potentially lower rates and fees than business credit cards

Does a business card affect your personal credit score?

A business credit card can impact your personal credit score in several key ways. Here’s how:

New loan request: If a business does not have a sufficient credit history to qualify for a business credit card, the card issuer may require the business owner to provide a personal guarantee (for example, your own credit history). In this case, the company will conduct a thorough investigation of your personal credit and you will be personally liable for the debts of the company if the company cannot pay them. This in-depth investigation will likely be reported on your consumer credit report and could briefly affect your credit score. New credit applications represent 10% of your FICO score.

“Even if you have an LLC or are incorporated, they might want you to put your Social Security number on as a personal guarantee,” says Nathan Grant, senior credit industry analyst at Credit Card Insider. “It still won’t report the daily charge to your personal credit report, but if your account becomes delinquent someone has to be responsible, especially early on when the business has no credit history. “

Payment history: Some banks report both on-time and overdue payment activity to consumer credit bureaus. This means that your personal credit score could be affected by your business credit activity. On the other hand, some banks only report negative payment activity to consumer credit agencies. You should check with the credit card company that issued your card to make sure you are clear on how they report payments. Here is a list of corporate credit card reporting policies for major credit card issuers, according to Bankrate:

Credit card issuer Report business credit card activity to consumer credit bureaus?
A capital letter Reports all activities
chase away Default reports
Discover Reports all activities
Bank of America Do not report
Citi Do not report
Wells fargo Do not report
PNC Do not report
American Express Default reports

Use of credit limit. If your business credit card reports activity to the consumer credit bureaus, you should use some of the standard best practices to make sure your personal credit is protected. For example, aim to keep your business card balance low compared to the total limit (better yet, pay it off in full each month when your statement is generated).

Should You Get A Business Card For Your Small Business?

A credit card can be a valuable tool for your business. Just as it is important to establish your personal credit history, it is important to establish your business credit history. The sooner you apply for a credit card, the sooner you can use it for other purposes.

While a business credit card can be great, it’s probably not right for every business. According to Tom Thunstrom, a small business finance expert at FitSmallBusiness, there are a few situations where a business credit card might not be the right choice.

Pro tip

Although your business credit card activity is not regularly reported in your personal credit report, late payments and overdue accounts can still hurt your personal credit score. Therefore, it is important to use your card responsibly.

First, if you decide to incorporate a credit card into your business’ financial strategy, it’s important to have clear policies in place from the start.

“Where it is not a good idea to get one is when a company has not defined its financial policies, for example who is responsible for managing the money,” Thunstrom said. . “You need to have pretty clear guidelines on how this card is going to be used.”

“Another situation where this may not make sense is where a business is having trouble making payments and staying on top of its finances,” Thunstrom said. “If they’re behind on payments or having trouble paying their rent, it’s probably not a good idea to add a credit card to that situation. It’s just another debt burden that they will have to pay off at some point.

Much like a personal credit card, a business card is only a valuable tool when used responsibly. If you miss payments or accumulate excessive debt, you could damage your business credit history in the future.

Which business credit card is right for you?

Just like personal cards, each business credit card has its own unique features and benefits. When it comes to choosing the right card, find one that offers a bonus that will benefit your business and terms that suit your needs. Keep in mind that the more generous the benefits, the more likely a card is to charge a substantial annual fee.

“Like getting an individual credit card, look at your needs as a business and find credit cards that are right for you,” Grant said. “You never want to take out a credit card and let that card shape the way you spend your money. “

Some business credit cards, like Capital One Spark Cash for Business, offer cash back on all purchases. Others may offer bonuses on travel and other company-specific expenses. An example of a card with these features is the Ink Business Preferred® credit card. Head over to to see the full list of our favorite business credit cards for 2021.

  • Introductory bonus:
  • Annual subscription :

    $ 0 introduction for the first year; $ 95 after that

  • Regular APR:

    20.99% (variable)

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon on our partner’s secure site.
  • Introductory bonus:
  • Annual subscription :

    $ 95

  • Regular APR:

    15.99% to 20.99% Variable

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon on our partner’s secure site.

For pricing and fees for the American Express® Business Gold card, please click here


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