Does business credit affect personal credit?

Your personal credit standing is always going to be far more important than your business credit standing, even when you apply for a card branded for business use because credit card companies hold business credit card users personally liable for any debt they incur. It is therefore important to maintain a responsible use by paying your debt on time and staying under your credit limit, as this will improve both your personal and business credit scores.

As for your second question, you can open a personal account in your name and use it for business purposes. Personal credit cards are particularly well suited for financing, as they are covered by the CARD Act and thus benefit from its protection against arbitrary interest rate increases on existing balances. With most business credit cards on the other hand, issuers do not have to wait for an account to become 60 days delinquent before increasing the cost of existing balances held on it. That in turn fosters debt instability, which is problematic when you consider that you’ll be held personally liable even for business credit card debt.

With that being said, we still recommend business-branded credit cards for everyday company purchases given their business-specific rewards and accounting features, not to mention the freedom they give you to customize spending limits for employees and then benefit from their spending. You can compare our favorite offers here. Hope this helps.

Business credit can affect personal credit, but how much of an impact it has depends on the credit card issuer. A little more than half of all major credit card issuers report business credit card information to consumer credit bureaus, according to WalletHub research. But they all handle business credit reporting a little differently.

• Capital One and TD Bank regularly report business credit card information to both consumer and commercial credit bureaus.
• American Express only reports negative information about business credit cards to consumer bureaus, and reports all information to commercial bureaus.
• Chase and Discover only report information to consumer bureaus if the account becomes seriously delinquent.
• Bank of America, Citibank, Barclays, and Wells Fargo only report business credit information to commercial bureaus, leaving consumer bureaus out of the loop.

At this point, it’s important to note that business credit scores and personal credit scores are compiled in different ways, using information from different credit bureaus (or at least separate divisions within a bureau). For example, Experian and Equifax both have business and consumer wings, but information isn’t shared between business and consumer files.

Nevertheless, there is a fundamental connection between business credit and personal credit scores. Most business credit cards require a personal guarantee, which means the primary cardholder will be personally liable for any debts incurred by the business. That’s the real reason why business credit affects personal credit to begin with. A business credit card user’s personal finances are relevant when it comes to an issuer’s ability to collect repayment for any future balance. As a result, most business credit cards ask for both an EIN and a Social Security number in order to assess both an applicant’s personal and corporate credit histories during the application process. And that, in turn, explains why applying for nearly any business credit card will put a hard inquiry on your personal credit report.

That said, having a business credit card that affects your personal credit report can also be a good thing, if you use the card responsibly. If your business credit card issuer reports all information to your personal credit report, it can help your score to have the positive information reported on a regular basis.

With regard to a relatively new business or small business, the credit card company will use your personal experience as a major criteria for offering you credit on a business card. In fact, they may ask the business owner to personally guarantee the credit card for it to be issued at all. More directly to your question, if you're not asked to personally guarantee the card, it should have little or no effect on your personal credit score. However, always keep in mind the credit card companies are pretty smart and it is likely that they would look at all scores related to you as an individual before making a credit decision. Hope this helps and good luck