Key takeaways:

• Small business credit cards often do not report payment activity to the owner’s personal credit. 
• This allows the business owner to separate their personal credit from the activity of their business. 
• Understanding how business credit cards report to personal and business credit can help business owners choose the right credit cards for their business needs.

A business owner’s loan fell through at the last minute. Desperate to move forward, she used her personal credit cards, charging many of them up to the limit. Her business continued to grow, but her personal credit scores plunged to a high “credit utilization rate”. 

A year or so later, she was able to get a small business loan, which she used in part to pay off the personal cards she had used for her business. With those card balances now down to zero, her credit scores skyrocketed, jumping around 100 points each.  

This story was related to me by a small business advisor, and is a perfect example of how credit cards may impact a business owner’s credit scores.

There are a number of reasons why you might choose a business credit card: 

• Rewards programs like travel rewards or cash back
• A 0% intro APR credit card for financing a major purchase over time
• The ability to track your business expenses

How a small business credit card may affect your personal credit scores may not be top of mind when you’re shopping for your next card, but it’s worth considering. 

Here we’ll detail how the major credit card issuers report business card activity to consumer credit reports, and what you need to know as you grow your business.

How Business Credit Cards Affect Personal Credit

Business credit cards can impact your personal credit in several ways:

• Most (but not all) small business credit cards do not appear on the cardholder’s personal credit unless they don’t pay the debt.  
• The majority of business credit card issuers reserve the right to report late payments to personal credit if the business defaults on the debt. 
• A few issuers will report all payment history, positive or negative, to consumer credit reporting agencies. 
• A very small number of card issuers will not report business credit card activity to personal credit under any circumstances. 
• Finally, most small business credit card applications involve a personal credit check that will result in a hard inquiry on the applicant’s personal credit. 

It’s also worth noting that most credit card companies will conduct a personal credit check when you apply for a business credit card, or personal credit card for that matter. This credit check creates an inquiry on the credit report accessed through Equifax, Experian or Transunion. (Some issuers will use a soft credit check to initially screen an application but most use a hard inquiry eventually. Hard inquiries affect credit scores.)

Individual credit inquiries generally do not have a significant impact on consumers’ credit scores, and the effect is often short-lived. But they can lower credit scores, so keep that in mind before you apply. 

Also understand that most small business credit cards require the cardholder to personally guarantee the debt. A personal guarantee means that if the balance isn’t paid off by the business, the cardholder will be on the hook for the entire amount. Just because a business credit card doesn’t appear on your personal credit reports, that doesn’t mean you can walk away from the debt without risking consequences to your personal credit reports and/or personal finances.

Business credit card information reported on owner/cardholder’s personal credit reports

Issuer	Regular Activity	Default/Negative
American Express	No	Yes
Bank of America	No	No
Capital One	Yes (some)*	Yes
Chase	No	Yes
CitiBusiness	No	No
Discover	Yes	Yes
PNC	No	No
US Bank	No	No
Wells Fargo**	No	No

The Difference Between Business Credit and Personal Credit

Most business owners are familiar with personal (or consumer) credit reports. Credit reports compiled by credit reporting agencies such as Equifax, Experian, and Transunion are used to create FICO scores and VantageScores, as well as other custom credit scores. Anyone who has applied for a mortgage, car loan or personal credit card is likely at least somewhat familiar with this.

In addition, though, businesses may have credit reports and business credit scores. The major commercial credit reporting agencies that compile business credit reports are Equifax, Experian, and Dun & Bradstreet.

However, many companies offering small business credit cards and small business loans often also check consumer credit reports or scores, in part because many small businesses (and especially newer businesses) don’t have robust business credit histories. They also often require personal guarantees.

If you’re a small business owner looking for small business loans, good personal and business credit can often help your business qualify for different types of financing.

And whether it’s personal credit or business credit, on-time payments are one of the best ways to build and keep your credit scores strong.

Should You Get a Business Credit Card That Doesn’t Report to Personal Credit? 

Is it better to get a credit card that does or doesn’t report to personal credit? The answer depends on your situation. As long as you pay your business card on time and avoid high balances, having a business card that appears on your personal credit reports should not be a problem, and may even help your credit scores by adding positive payment references.

The trap that some business owners find themselves in is that they charge everything they can to their business credit cards to maximize rewards, or they find themselves carrying balances because they need to use the line of credit their credit card provides when cash flow is tight. 

Even if you make every payment on time, the balances on your credit cards that appear on your personal credit reports may have a negative impact on your credit scores. Why? Credit scoring models take into account your “debt usage ratio” or “credit utilization ratio”, which compares the balances reported against available credit limits, often for each card as well as all credit cards totaled together. 

Here’s an example:

Let’s say you have a $1000 credit limit on a credit card and the balance reported that month to the consumer credit bureaus is $350. That equals 35% utilization, which may be considered on the high side. (There’s no set percentage of utilization that’s too high; it depends on everything in your credit reports as well as the credit scoring model that’s used. But keeping utilization below 20-25% is often a safe move when it comes to most credit scoring models.) 

On the other hand, if your personal credit history is a bit thin, a business card that reports your full account activity may help boost your personal creditworthiness. For example, if you don’t have any open and active credit cards, your credit history may benefit from getting a credit card and establishing a positive repayment history.

Choosing a business credit card that does not report to personal credit may be helpful if you know there will be times you need to run up charges that put you close to the limit or carry a balance — think holiday inventory, or that big tradeshow, for example — and you don’t want that activity to bring down your scores.

Ultimately, you’ll have to decide whether having a business credit card that does or does not report monthly account activity to your personal credit reports is right for you. Either way, you’ll want to keep tabs on your personal and business credit scores, to make sure they are as strong as possible—and stay that way.

How to Find the Right Business Credit Card for Your Business

Choosing the best business credit cards (and yes, you can have more than one) involves answering several key questions:

1. Will I carry a balance? If you anticipate needing to use the credit card to access a line of credit, the interest rate is very important. Credit cards can be a valuable source of short-term business financing, but interest rates are often high. You may want to consider a 0% intro APR business credit card for this scenario.
2. Do I want perks? Choosing a rewards card requires additional consideration. Even cash back credit cards may have different tiers of rewards based on your business spending and the types of business expenses you normally have. Researching rewards cards can be well worth it.
3. What can I qualify for? Most small business card issuers—though not all—base their decisions largely on the applicant’s personal credit scores and income from all sources (not just the business). Most require good credit, though there are a few business credit cards available to those with lower credit scores. 

Can I Get a Business Credit Card if My Personal Credit Is Bad? 

Getting approved for a business credit card with poor personal credit can be challenging, but there are options. Most major credit card issuers review personal credit scores during the application process, typically requiring scores of 670 or higher. 

However, some issuers offer secured business credit cards that require a security deposit, which reduces their risk and makes approval more likely even with lower credit scores. And a few issuers don’t check personal credit. 

Does Business Credit Card Data Appear on Personal Credit?

Not usually. Most small business credit card issuers only report negative information, such as severe late payments or defaults, to personal credit bureaus, if they report at all.  

Before applying for a business credit card, review the issuer’s reporting policies to understand how card activity might impact your personal credit profile. Remember that even if regular activity isn’t reported, most business credit cards still require a personal guarantee, meaning you’re personally responsible for the debt if your business cannot pay.

Primary Differences in Business Credit Cards and Personal Credit Cards on Credit

Personal credit cards always appear on all three major consumer credit reports and influence personal credit scores through factors like payment history and credit utilization. 

Business credit cards, however, may report to one or more of the major business credit agencies, helping build your business credit profile separately. (It’s common for issuers to report to some business credit bureaus, but not all of them.) 

Another key difference is that business credit scores typically focus most heavily on payment behavior. The importance of other factors like credit utilization depends on the credit scoring model used. 

It’s also worth noting that business credit reports rarely list the name of the issuer. 

Finally, another difference is that with consumer credit cards, authorized users may benefit from the payment history of the primary cardholder. Business accounts often offer employee cards instead.. 

Frequently Asked Questions

Can you build business credit without using personal credit?

Yes, you can build business credit without using personal credit. Vendor (or net-30) accounts, for example, can help build business credit  (if they report to business credit bureaus) and don’t report to personal credit.

However, many small business lenders check personal credit until the business is sufficiently established and earns significant revenues. Even then, traditional financial institutions often prefer to check personal credit. 

Is business credit linked to personal credit?

Business credit reports and personal credit reports are kept completely separate. That’s true even of credit agencies such as Equifax and Experian, both of which have both consumer and personal credit reporting agencies.

However, certain credit scoring models may use information from both personal and business credit to create a single credit score. The best example of this is the FICO SBSS score which can use personal and business credit data to create a FICO credit score used in small business lending decisions.

Should I only choose business cards that don’t report to personal credit? 

The decision to choose a business card based on personal credit reporting depends on your specific financial situation and business needs. If you anticipate carrying large balances for inventory purchases or seasonal business expenses, for example, a card that doesn’t report to personal credit might be advantageous since these balances won’t affect your personal credit utilization ratio. This can be particularly important if you’re planning to apply for a personal loan or mortgage in the near future.

However, if you consistently make on-time payments and maintain low balances, a business card that reports to personal credit can actually benefit your credit profile by adding to your positive payment history and credit mix. The key factors to consider are your spending patterns, cash flow management needs, and current credit-building strategy.