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Most business credit cards can affect your personal credit score in two ways:
Applying for a small-business credit card will likely result in an immediate, but temporary, hit to your personal credit score due to a hard inquiry from the card issuer. Scores usually rebound quickly after such inquiries.
Several business credit card issuers will report late payments and serious delinquencies to consumer credit bureaus. This could have a greater negative impact on your personal credit.
Factors like credit utilization and on-time repayment generally won’t affect your personal credit score. These can, however, help you build your business credit.
Chase
Ink Business Cash® Credit Card
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When business card activity is reported to consumer credit bureaus, it only affects the primary cardholder — the individual who applied for the card and personally guaranteed the debt on the account. If you’re an employee carrying a company-issued credit card, it shouldn’t affect your personal credit.
Which business credit cards report to personal credit bureaus?
Late payments can show up on your personal credit report (and negatively impact your score) if you have a business card through most major card issuers:
| Will the issuer report small-business credit card activity to consumer credit bureaus? |
|---|
American Express | Yes, but only negative information. |
Bank of America | Yes, but only if your account is not in good standing. |
Capital One | Yes, with some exceptions (see below). |
Chase | Yes, but only if the account is seriously delinquent. |
Citi | Citi may report your activity to credit bureaus. |
U.S. Bank | Yes, but only if the account is seriously delinquent. |
Wells Fargo | Yes, but only negative information. |
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.
» MORE: What happens if you can’t pay your business credit card?
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 their cards can be good tools 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.
» MORE: DUNS number: What it is and how to get one
How 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.
When you apply for a small-business credit card, the card issuer will likely perform a hard inquiry, which will show up on your credit report. Issuers check your personal credit because it’s a key factor in their decision to approve you for a card; your personal credit history helps issuers assess their risk.
Beyond that:
If you pay on time and stay well under your limit: Your business credit card may help your business credit score. This could make it easier to qualify for loans on good terms and negotiate government contracts. If your card is from Capital One, which reports activity to consumer credit bureaus for most of its business cards, this may also help your personal credit score.
If you miss a payment or use too much available credit: Your business credit card 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.
Even if your business 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 your personal credit report and damage your credit scores.
Should you get a business card that doesn't affect your personal credit?
Most business cards affect your personal credit in some way. Corporate cards, like Ramp and Brex, are the main exception. Most corporate cards do not require a personal credit check and will not show up on your personal credit report. However, these cards are only available to incorporated businesses and typically require strong annual revenue and a good business credit score.
Capital One’s two options that don’t report activity to consumer credit bureaus (the Capital One Spark Cash Plus
and Capital One Venture X Business
) are both business charge cards. These cards require you to pay your balance in full each month, and you’ll need excellent personal credit (a FICO score of at least 720) to qualify. If those cards don’t fit your business, though, you’re better off prioritizing ones that do — even if they might affect your personal credit.
FAQs
If you miss a payment or use too much available credit: Your business credit card 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.
Can a business credit card affect my personal credit score? ›
If an issuer reports your business credit card to consumer credit reporting agencies, it will affect your personal utilization ratio, payment history and other credit scoring factors.
Does a business credit card do a personal credit check? ›
business credit cards are designed especially for business purchases, which can help to keep your personal and business expenses separate. with a small business credit card, most lenders will assess your business credit score as well as your personal credit score.
Can my LLC affect my personal credit? ›
If your LLC has debts taken out in the company's name, only the LLC's business credit report will be impacted by whether you repay your debts on time. An LLC loan will only impact your personal credit if you cosign or guarantee it. If you don't do so, your credit report will remain unaffected.
Is business credit tied to personal credit? ›
Your business profile is separate from your personal credit history. There are credit reporting services that only deal with businesses, with Dun & Bradstreet being the largest and best known. If you have more than one business, you can have a separate report for each, as long as it has its own EIN.
Can you get in trouble for using a business credit card? ›
No, it's not illegal to use a business credit card for personal purchases. There may still be consequences through your credit card issuer, though. Many credit card issuers have terms that specifically forbid cardmembers from putting personal expenses on their business accounts.
Is it better to use business credit card or personal? ›
Business credit cards tend to come with higher credit limits than personal credit cards. A higher limit can provide more flexibility in the face of the steep operating costs small businesses can require. Yet a personal credit card might be best if you don't need a particularly high credit limit.
Is it legal to use business credit card points for personal use? ›
Since business card rewards are not taxable, redeeming points or miles for personal benefit is legal and won't create any tax headaches. However, earning cash back can affect how much you're able to deduct for business purchases. And you could run into challenges if you're running your business with a partner.
What is the easiest business credit card to get? ›
Easiest business cards to get
- Ramp Corporate Card.
- Brex Corporate Card.
- First National Bank of Omaha Business Edition Secured Mastercard Credit Card.
- Capital One Spark Cash Plus.
- Bank of America Business Advantage Unlimited Cash Rewards Secured Card.
- Chase Ink Business Unlimited Credit Card.
A business loan can affect personal credit. If you personally guarantee a business loan, your credit will be affected. If you're a sole trader or run a partnership, your finances will also be affected by a business loan. In such instances, your credit scores will reduce if your business delays payments or defaults.
This EIN allows your LLC to open bank accounts, apply for loans, and build credit in its own name. An LLC starts with no credit score. Just like an individual, an LLC must build its credit over time by engaging in responsible financial behavior, such as taking out loans and lines of credit and making payments on time.
Do business credit cards do a hard inquiry? ›
In most cases, a card issuer will check your personal credit report and score when you apply for a new business credit card. This is known as a hard credit inquiry, and it can have a small but temporary negative impact on your credit score. Hard inquiries may impact your FICO® Score for up to 12 months.
Does cancelling a business credit card hurt your credit? ›
If you miss a payment or use too much available credit: Your business credit card 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.
Is my business credit score different to my personal credit score? ›
Yes, the two scores are separate and they measure different things. Your personal credit score measures your ability to pay back a debt, and a business credit score looks at the ability of your company to do so. In the UK, you'll have two separate credit files – one for you as a consumer, and another for your company.
What credit score do you need for a business credit card? ›
You need a personal credit score of 700 or higher to qualify for the best business credit cards. The exception to this rule is corporate cards, which usually don't check your credit score. Instead, these cards require that you have a certain amount of capital in a business bank account.
Does Chase check personal credit for business credit card? ›
Hard credit inquiry
Applying for a business credit card may involve a hard check on your personal credit report. Just as with business loans, lenders may need to use your personal credit history to assess your creditworthiness.
Does business bank account affect personal credit score? ›
Opening a business checking or savings account will not affect your credit score in any way - because after all, you are not dealing with credit. However, some banks may see your poor credit as proof that you are unreliable - in which case, they may not give you an account.
Will a business loan show on my personal credit? ›
Business debts don't impact personal credit if the company and the owner are separate legal entities. Loans against your retirement plans like 401 (k) also won't appear on personal credit reports. If you're a small business owner searching for alternative financing, invoice factoring can also be a good option.
Is it better to build personal credit or business credit? ›
Some lenders and credit card issuers may consider both your personal credit and your business credit, but having a strong business credit score can help you get lower interest rates, higher credit limits and better terms.
