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Business credit cards are a great way for small business owners to keep business expenses completely separate from their personal expenses. Though business credit cards can help demarcate your expenses, your credit history may not be quite so separate.
Until your company meets the criteria for a corporate credit card, your business credit cards is inextricably tied to your personal credit in one way or another. This starts from the very beginning, because every business credit card application includes a personal credit check.
So, do business credit cards affect my credit score? Yes, absolutely. But that's not the only question to ask. Do business credit cards affect my credit score after I'm approved? That answer is a lot more complicated. We'll break it down.
Something key to realize about business credit cards is that you, as the primary cardholder, are responsible for the debt. This is called a "personal guarantee," and it's found in the terms and conditions of virtually every business credit card. Personal guarantees are required for sole proprietors and LLCs alike. The game can change at corporate level, but that's an entirely different credit product.
In other words, just because a credit card is in your business's name instead of your own doesn't mean you're off the hook for the balance -- or for the credit score damage if you're delinquent. The personal guarantee means tanking your business credit can also tank your personal credit score.
That said, the day-to-day impacts of business credit cards on your personal credit score vary.
Initially, the impact is minor. Because credit card issuers rely on your personal guarantee, they pull your credit report when you apply for business credit cards. This hard credit inquiry winds up on your personal credit report, likely dinging your credit score a few points.
After you're approved, the effect your business credit cards have on your personal credit depends on which company issued your card. Some credit card issuers report your business card's activity to the consumer credit bureaus every month, exactly as they would a personal account. Other issuers don't report your balances or payment history unless your account becomes delinquent.
Although your business credit cards always have some impact on your personal credit score, you can minimize the everyday influence of your business cards. Here is a look at which issuers are known to regularly report business credit card activity to consumer credit bureaus:
American Express | No |
---|---|
Bank of America | No |
Barclaycard | Sometimes |
Capital One | Yes |
Chase | No |
Citi | No |
Discover | Yes |
U.S. Bank | No |
Wells Fargo | No |
Of course, it's worth pointing out that this refers just to regular activity, like monthly balances. If your account becomes delinquent -- typically 30-plus days late -- any issuer is very likely to report your account as delinquent to both business and consumer credit agencies.
Just as with a personal card, a delinquent business card account has a profound and long-lasting negative impact on your personal credit score.
There are several factors determining your credit score that can be impacted by a business credit card, including:
From the start, your business card influences your new credit factor thanks to the hard credit inquiry from the application. Your business credit cards reporting to your personal credit can have additional impacts, particularly in your account age. Scoring agencies look at the length of your overall credit history and the average age of all of your credit accounts. A new credit card, business or personal, decreases your average account age, thus decreasing your credit score.
Credit utilization can be especially impacted by a business credit card.
Basically, credit scoring agencies look at how much credit you are using as a function of how much credit you have available, and this ratio is known as your utilization rate. If your issuer reports your business card balances to the consumer bureaus, the purchases you make for your company could increase your personal utilization rate.
A high utilization rate can decrease your credit score, so your personal credit can suffer if you frequently make large purchases with your business credit cards. However, paying down your balance will help improve your credit score again. And if you rarely make large purchases, a business card added to your personal credit report could actually be good for your credit score.
Even the smallest of small businesses need access to credit. Though there can be a number of credit score impacts from business credit cards showing up on your personal credit report, most are minor -- so long as you're using your business cards responsibly.
Below, we've listed three of our top-rated business credit cards. To see more, check out our full list of the Best Business Credit Cards.
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Ink Business Unlimited® Credit Card |
American Express Business Gold Card |
Capital One Spark 1% Classic Card |
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 4.25 out of 5 stars.
4.25/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Rating image, 3.75 out of 5 stars.
3.75/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best = Excellent = Good = Fair = Poor |
Apply Now for Ink Business Unlimited® Credit Card
On Chase's Secure Website. |
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Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Fair/New to Credit Under(669)
Fair/New to Credit Under(669) |
Welcome Offer: Earn $750 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening. Earn $750 bonus cash back |
Welcome Offer: 70,000 Membership Rewards® points after you spend $10,000 on eligible purchases with the Business Gold Card within the first 3 months of Card Membership 70,000 Membership Rewards® points |
Welcome Offer: N/A |
Rewards Program: Earn unlimited 1.5% cash back on every purchase made for your business Earn unlimited 1.5% cash back on every purchase |
Rewards Program: 4 points per $1 in two of the following categories where you spend most: gas, dining, advertising, transit, electronics & wireless ($150,000 annual spending cap). 3 points per $1 on flights and prepaid hotels booked on AmexTravel.com. 1 point per $1 on other purchases 1x - 4x points |
Rewards Program: 1% cash back |
Intro APR: 0% Intro APR on Purchases Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A |
Intro APR: Purchases: N/A Balance Transfers: N/A |
Intro APR: Purchases: N/A Balance Transfers: N/A |
Regular APR: 18.49% - 24.49% Variable |
Regular APR: 19.49%-27.49%, variable |
Regular APR: 29.99%, variable |
Annual Fee: N/A $0 |
Annual Fee: $295 |
Annual Fee: $0 |
Highlights:
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Apply Now for Ink Business Unlimited® Credit Card
On Chase's Secure Website. |
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The information for the American Express Business Gold Card has been collected independently by The Ascent. The card details on this page have not been reviewed or provided by the card issuer.
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Our Credit Cards Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.