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A business credit card is a great tool to separate your business and personal finances and establish your business credit history. But applying for and using a business card could impact your personal credit score, depending on the card and how you use it.
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Does business credit affect personal credit?
Applying for a small-business credit card will likely result in an immediate, albeit temporary, hit to your personal credit score due to a hard inquiry from the card issuer. This is usually small and short-lived.
That’s because card issuers typically rely on your personal credit for approval, even on business cards. Most also require a personal guarantee that says you’ll repay the debt if your business fails, so your personal credit history helps issuers assess their risk.
Beyond the initial hard inquiry, most business cards only report activity to commercial credit bureaus. The one exception: negative payment history.
Several business credit card issuers will report late payments and serious delinquencies to consumer credit bureaus. This will negatively impact your personal credit.
Which business credit cards report to personal credit bureaus?
Business credit card activity is typically not reported on your personal credit report, but there are a few exceptions.
Capital One reports all business card activity to both personal and business credit bureaus, with two exceptions: the
Capital One Spark Cash Plus
and the Capital One Venture X Business
. These business charge cards will only show up on your personal credit report if you don’t pay your bill.Late payments can also show up on your personal credit report (and negatively impact your score) if you have a business card through American Express or U.S. Bank.
Does the issuer report small-business credit card activity to consumer credit bureaus? | |
|---|---|
American Express | Yes, but only negative information. |
Bank of America | No. |
Capital One | Yes*. |
Chase | Yes, but only if the account is seriously delinquent. |
Citi | No. |
U.S. Bank | Yes, but only if the account is seriously delinquent. |
Wells Fargo | No. |
*The Capital One Spark Cash Plus and Venture X Business cards only report to consumer credit bureaus if the account is not in good standing.
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Whose credit do business credit cards affect?
When business card activity is reported to consumer credit bureaus, it affects only the credit of the primary cardholder — the individual who applied for the card and personally guaranteed the debt on the account. Employees who carry company-issued credit cards generally won't see the activity appear on their personal credit reports.
Even if the card doesn't report to consumer bureaus, the personal guarantee remains in effect: The primary cardholder is on the hook for the debt on the account. If that debt goes unpaid and ends up in collections or court, that could be reflected on the cardholder's personal credit report and damage their credit scores.
🤓 Nerdy Tip
Corporate cards, like Ramp and Brex, do not require a personal credit check and will not show up on your personal credit report. These cards are only available to incorporated businesses and typically require strong annual revenue and a good business credit score.Which credit cards can help you build business credit?
All of the major business credit card issuers — including American Express, Bank of America and Capital One — report card activity to commercial credit bureaus and can be a good tool to build business credit.
Responsible usage is key, though. That means paying on time (or early) and keeping your credit utilization — how much you’ve used of your available credit — below 30%. You can check your business credit score with the three main business credit bureaus: Dun & Bradstreet, Experian and Equifax.
How do business credit cards appear on your personal credit report?
When business credit card activity shows up on your credit reports, it’s treated the same as any other credit card debt by the two main credit scoring methods, FICO and VantageScore. Data from that account will affect your length of credit history, credit utilization and payment history, among other factors.
Assuming you have a card that reports to both commercial and consumer credit bureaus, what should you expect?
- If you pay on time and stay well under your limit: The account may help both your personal and business credit scores. This could make it easier to qualify for loans on good terms and negotiate government contracts.
- If you miss a payment or use too much available credit: The account could hurt both your personal and business credit scores. Even if you close your card, its history could stay on your personal credit reports for up to 10 years.
Should I get a business card that doesn't affect personal credit?
If you can imagine making a few slip-ups with business credit, you might want to get a card that doesn’t report to consumer credit bureaus as a precaution. But generally, it's a better idea to apply for the card that offers the rewards and benefits you’re most interested in, instead of focusing on the card’s reporting policy.
It’s important to be mindful of how your business credit card affects your personal credit. But don’t make the mistake of thinking you can get rid of all your personal liability by choosing a business credit card that doesn't report to consumer credit bureaus. If you want to protect your personal assets, your best bet is to borrow sparingly and pay your bill on time, every time.
