Small business credit cards often offer many benefits, including valuable perks as well as access to a line of credit. If you’re shopping for a business credit card, you’ll probably focus on the benefits and rewards you can earn, as well as the annual fee and interest rate you’ll pay.
How a small business credit card may affect your personal credit scores may not be top of mind, but it’s worth considering. Here we’ll detail the major issuer’s policies about reporting small business credit 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 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 report, 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 | All 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 |
**Wells Fargo generally does not report negative information to the owner’s personal credit, but reserves the right to do so.
Check with your card issuer for updated information. Copyright 2020 Nav Technologies Inc.
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 because many small businesses (and especially newer businesses) don’t have robust business credit histories.
If you’re a small business owner looking for small business loans, good personal and business credit can help.
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% 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. 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 on your 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 a few key questions:
- 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. You may even want to consider a 0% balance transfer card.
- Do I want perks? Choosing a rewards card requires additional consideration. Even cash back credit cards may have different tiers of rewards based on the types of business expenses your business has. Researching the right rewards cards can be well worth it.
- 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.
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 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 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.
This article was originally written on November 23, 2015 and updated on January 8, 2024.
Thank you for some very informative material,this was a great read for me,I always enjoy gaining knowledge so that I can pay it forward,I have a question,if I have 3 current business credit cards and I have paid the bills on time but I’m at the max,would I be able to get approved with another credit card for balance transfer with 0 interest, please respond,thanks
It’s really hard to say Jerome, but if you have three cards maxed out your credit scores have probably been affected by high utilization. Have you checked your credit scores? Have you looked at your credit card matches in your Nav account?
Hello, I would like to know that it is true that canceling a business credit card does not affect commercial credit.
Most small business credit cards report to business credit. You’ll find a list here.
Not new to the business world , just new to doing it the right way. I appreciate the personal profiles of the people that put Nav together. The personal touch is very comforting, makes me feel like you know what I’m experiencing and you can direct me in the best way to go that’s optimal for me and my business. I will pass this information to family and friends. Thank you for all your hard work, time, and attention.
Thank you for the kind words! We look forward to helping you and other entrepreneurs find the financing you need. Best to you.
Thanks to Sam at HelpMeBuildCredit.com for alerting us to the change in reporting policy for some Capital One cards. We have confirmed the new reporting policy with a spokesperson at Capital One.
I wanted to know, how does the payment structure work for business credit? I know with personal credit, you can’t go over 30% of the utilization rate or it will hurt your score. Is it the same with business credit? If so, does business credit. Follow the same formula as personal? I.E. pay more than the minimum balance on the due date, keep the utilization rate under 30%, and use 10% of the credit card on the statement balance. I can’t find this information online.
Great question. On the consumer side, FICO dominates consumer scores (with VantageScore as the primary competitor). With business credit each scoring model has its own formula and there is not a lot of transparency. (The business credit scoring models don’t disclose the “FICO formula” for their scores and they aren’t required to do so.) Most business scores aren’t as heavily weighted to utilization though it can be a factor. Payment history by far is most important so getting accounts that report and paying on time is your best strategy.
Very upset. I checked my Dunn and Bradstreet Business Credit Report…NOTHING! I have had a American Express Gold Business for more than three years, and their not reporting to my business credit. Very disappointing.
Niko, As we mention in this article Which Credit Cards Can Help Me Build Business Credit? American Express reports only negative activity to D&B. They do report to the Small Business Financial Exchange (SBFE).
When opening a Chase Southwest business card does it report to personal credit? Does it do an inquiry into personal credit?
Yes there is a personal credit check. Generally though Chase doesn’t report to personal credit unless you default. It is always good to double check with them if that’s a concern for you.
Your article states that US Bank does not report business credit card activity to consumer credit reports. I called and spoke to two different representatives to confirm this info. They stated that they DO report to consumer credit reports. Where did you get this information, did you talk to US Bank directly? Can you please confirm why I received conflicting information?
I applied for US Bank card and accidentally hit the apply button prior to taking off my credit security lock . Not only was I not approved with 795 credit score with good overall credit history . It put an inquiry on my Experian report. Which I was trying to ignore.
They only report to the credit Bureaus, if your late on your credit card payments.
I had just ran my business credit score through Experian.com. I have a score of 3. I paid for the report to show my payment history and it came back to my surprise the following: looking below you can see there is no payment history. I have had balances and a steady monthly payment history for over 2 years on Wells Fargo Business Platinum and a year and half on Chase Ink with a great payment history. These are two banks that claim they do not report on personal credit. I checked my personal credit and they are not showing up in my personal, so I assumed because they are strictly business used cards it must be showing on my business credit, but they are not showing either of them. Can anyone guide me and assist on this? I opened these cards in hopes to establish business credit. I am baffled. Can you tell me what may be going on?
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This chart is very helpful.
What about Barclays Bank ??
Do they report to personal credit report???
My understanding is that they do not, though I have been unable to confirm that with the issuer. Still trying!
I have an LLC how do I get a business credit card
Diana, You can search for and apply for a business credit card here at Nav. Note the decision will largely be made based on your personal credit scores and income from all sources. If you have a Nav account you’ll also see MatchFactor for the business credit cards you’re interested in. Hope that is helpful!
Hi there.
I have had a business since 2001 and collected income for the business with retainers from various principals. . Over the past few years, many of these principals have slow paid me and I ended up having to take an actual job (as of a year ago). In the next two months, I will have very little money coming in and it will cease. I have amassed unfortunately $17K in debt on a business Credit card with Bank of America with some business investments that went south (yes, I know, but it was for what I thought to be a product with guranteed success-not). I have had to keep putting money into the business account to make payments on the card (about $300 a month just to make the min payment- it’s at about a 7 percent interest rate).
However; in addition to my real job, I do have a secondary gig going with health insurance where I am working the weekends. Last year, it netted me an extra $15K, but I am not sure what that will be in 2019 (could be alot more or even less depending on how some marketing pans out for the insurance types I work with).
I am wondering if I should modify my charter to have that income go into the business account (thus keeping the business open and be able to continue to use that business as non-reimbursed employee business expenses, home office, etc., – with my current main job as well as the deductions I can garner from that since you can’t claim non-reimbursed or work at home deductions anymore as of 2018.
Or do I just shut the business down and try and work something out with Bank of America? Also, would that affect my personal account if I do that? I have never had to haggle with a bank before to pay off a debt short of what is owed.
I don’t really know the best way to go…
Appreciate any advice as to this matter. Thanks
Lee Miller
Lee,
I’m sorry to hear things haven’t been going well for your business.
First, I would recommend you talk with a qualified tax professional about the income/expenses issue.
Second, with regard to your business credit card debt, you have likely signed a personal guarantee which means the issuer likely has the right to try to collect from personal assets if your business defaults on its debt. Issuers do negotiate settlements, however, so it’s possible you may be able to work out a settlement on that debt, allowing you to resolve it for less than the full balance.
Third, with regard to how this might affect your personal credit reports, the chart above will hopefully be helpful. Please keep in mind this is information we’ve received from the card issuers and may be subject to change.
Finally, do you think it would be helpful to get some outside perspective on your business situation? Free help is available from your local SCORE chapter or SBDC office. Use the SBA local assistance locator to find assistance in your area.
Hi Lee,
If you do determine that negotiating a lower pay off is best, major banks will often settle their business accounts in a similar manner to how they settle personal. You have to be late for their recovery policies to kick in, so you are likely looking at 5 months of being late in order to optimize savings when settling your credit card.
I have an established business with high revenues but brand new to building and establishing my business credit report. Do you have recommendations to secured business cards that report to business credit agencies but perhaps not to personal? I believe Wells Fargo does and BBVA does not report. Any others that you can suggest?
What about Barclay’s? You don’t mention whether they report new business accounts to personal credit bureaus.
I didn’t include them because they were not issuing business cards in the US at that time. They have introduced the JetBlue Business Card since then; will look into that one. Thanks!
Since this posting how does Barclay JetBlue card report?
Great question Ashley. I’m contacting them.
I know this is an old article but I do have a question. I had a “business” Costco credit card from AMEX that I would like to be reported to my personal credit. It is a very old account and I have kept a low balance and on time payments. Nothing else shows up on my report except my mortgage and some older closed accounts. I think it could raise my score as I have tried everything else and I am still in the “fair” range. Is there a way to “make” AMEX report it?
Great question! No, you can’t force an issuer to report, unfortunately. It does sound like you could benefit from a revolving account on your credit reports though. The only way to get an “aged” revolving history would be to have someone add you to one of their accounts as an authorized user. If they do, it’s likely the entire account history would be reported. But the next best option is to get a personal credit card and let that help round out your mix of credit and add some current activity to your reports. Hope that helps!
It does. Thank you. Just frustrated hat they will only report “the bad”. I would have changed my account type if I knew this information earlier. Live and learn I guess… Thanks again!