How you use your business credit card can impact your personal credit. Some business credit cards report payment history to consumer credit bureaus, which means any late payments you make could hurt your personal credit score. But if you use your card responsibly and always pay your bills on time, a business credit card could help you strengthen your personal credit score.
If you’re concerned about your business credit card activity appearing on your personal credit report, choose an issuer that reports payment history to business credit bureaus only. Credit usage and payment history on the U.S. Bank Business Platinum Card, for example, will appear only in your business credit report, meaning this card could help you build strong business credit, but not personal credit.
How Business Credit Cards Affect Personal Credit
While you can find small business credit cards that don’t report to consumer credit bureaus, most issuers will report your card history, at least in some circumstances. Even if the issuer doesn’t report card activity to consumer bureaus, it will require a personal guarantee, meaning you are personally liable to repay card debt. Before you apply for a new card, you should first learn how a business credit card works to avoid pitfalls that could hurt your score.
Build your business credit score and your personal credit score by:
- Paying your balances on time: Your payment history makes up 35% of your credit score. If you make late payments, business credit card issuers will report this information on your personal credit report, and it can damage your personal credit score. When you always pay your balance on time, you build a healthy payment history and keep your account in good standing. You also save you and your business from late payment fees.
- Maintaining low balances: Your credit utilization ratio, or the amount of credit you’re using in relation to your total available credit, makes up 30% of your credit score. A credit utilization ratio greater than 30% can harm your credit score. So if you have a $1,000 credit limit, you should use no more than $300 of available credit on your card.
- Knowing how applications can impact your score: Issuers often require a hard credit check on your personal credit report when you apply for a business credit card. Hard credit checks can dent your personal credit score up to five points. Hard inquiries also stay on your credit report for two years, but only impact your score for one year. To avoid unnecessary hard inquiries, make sure to only apply for a credit card you qualify for and spread out your applications.
- Understanding your personal guarantee: Business credit card issuers don’t require collateral for approval, but most do require a personal guarantee for both startup businesses and established companies. A personal guarantee means you—the business owner—are personally liable for the business’s debt obligations if the business is unable to repay that debt.
- Avoiding delinquency: Some business credit card issuers may report all your activity to personal credit reporting bureaus. However, other issuers only make negative reports, such as when you’re 60 days delinquent on payment.
Business Credit Card Issuers Credit Reporting Policies
Credit card reporting policies vary by issuer. Some card issuers that report to consumer credit bureaus will only report negative activity, such as delinquent payments, and will not include other regular activities like monthly payments and balances. Others, however, may report all activity.
Issuer | Reports to Consumer Credit Bureaus | Reports to Business Credit Bureaus |
|---|---|---|
Only if your account is delinquent | ✓ | |
Only if your account is delinquent | ✓ | |
All activity | ✓ | |
Only if your account is delinquent | ✓ | |
No | ✓ | |
All activity | ✓ | |
No | ✓ | |
No | ✓ |
Wells Fargo, U.S. Bank, and Citi don’t report your business activity to consumer credit bureaus, which means these cards cannot help build your personal credit. American Express, Bank of America, and Chase only report delinquent accounts, which means they can damage your personal credit if you are behind on payments. Discover and Capital One, however, can either help build your personal credit or damage it, depending on your activity.
Business Credit Cards That Don’t Report to Personal Credit
Your business credit card can only impact your personal credit if the issuer reports to the consumer credit bureaus. If you want to avoid your business credit card affecting your personal credit, you can apply for a business credit card that doesn’t report to personal credit bureaus like Wells Fargo, Citi, or U.S. Bank. While your business activity from these issuers won’t hurt your personal credit, it also cannot help build your personal credit.
Bottom Line
Business credit cards can affect your personal credit score when issuers make a hard inquiry on your credit report or when you use a credit card that reports to consumer credit bureaus. If you don’t want your business credit card to affect your personal credit, you may opt for a business credit card that doesn’t report to the personal credit bureaus.
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