Do business credit cards affect your personal credit score?

Business credit cards are widely available for your small business, side hustle, or new business idea. But they could affect your credit score, so make sure you understand how they work.

Business credit cards work the same way as a personal credit cards and are offered by most card issuers and banks. If you've compared credit cards in the past, you may have noticed they often come with better perks than a personal card, such as better rewards rates, higher limits and useful organizational tools such as spending reports and the option to add memos, PO numbers or line items to purchases. 

Nearly anyone who can qualify for a credit card may be able to get a business credit card as long as you're in some phase of running a business. It may mean you're just starting to develop an idea for a company, sell crafts, work as a rideshare driver, or your startup has finally taken off.

It's important to understand that most business credit cards will require a personal credit check and a personal guarantee. If your company is unable to pay its credit card bill, you're still on the hook for the charges. However, depending on the type of business credit card you were approved for, it may (or may not) affect your personal credit score.

Why get a business credit card?

As mentioned, a business credit card may come with better features and perks than a personal card. In addition, separating your work and personal spending is a good idea. It could make filing taxes easier and help establish good financial habits as your business grows. 

By the time you're ready to form an LLC or incorporate, showing that you've historically kept business and personal expenses separate offers you protections against "piercing the corporate veil". The courts use the term to determine if company directors or shareholders are liable for the business entity's debts or practices. If you're intermingling your personal bills with your company's, a court could determine you are personally responsible for any issues that arise in your business.

Top business credit card perks

Some of the reasons you may want to start separating your work-related and personal spending include:

  • Start building business credit: Having a good business credit score is just as important as good personal credit history. You'll need it if you ever want to expand your business by applying for a loan or qualifying for a line of credit. The longer your company's credit history, the better -- even if it starts small.

  • Bigger welcome bonuses: Business credit cards often come with more lucrative welcome bonuses. For example, the Chase Ink Business Cash® card gives you $750 when you're approved. The Business Platinum Card®  from American Express deposits 100 000 bonus Membership Rewards points into your account. However, most business cards will require a higher spending threshold to earn the welcome bonus, so make sure you read the fine print.

  • More spending categories: Business cards typically expand on the usual grocery store, restaurant and gas station categories. You may have opportunities to earn rewards from office supplies, internet services, equipment purchases and more.

Do business credit cards affect your personal credit score?

Most business credit cards will require you to provide your Social Security number when you apply. They use your personal credit history to approve or deny you. However, not all the cards that run your credit will then report your payment and spending to your personal credit file. Here is how the following major business credit card providers use your personal credit file:


Requires a personal credit check/guarantee

Reports to consumer credit bureaus

Reports to business credit bureaus

American Express

Yes

Negative information only

Yes

Bank of America

Yes

No

Yes

Brex

No

No

Yes

Capital One

Yes

Negative information only

Yes

Chase

Yes

Negative information only

Yes

Citi

Yes

No

Yes

Discover

Yes

Yes

Yes

Office Depot OfficeMax credit card 

No

No

Yes

Ramp

No

No

Yes

Silicon Valley Bank

No

No

Yes

Stripe

No - approval is based on payment processing history

No

Yes

Wells Fargo

Yes

No

Yes

Advantages of business cards that don't affect your personal credit score

There are a few reasons why choosing a business credit card that doesn't affect your personal credit score is a good idea.

Less credit utilization

Signing up for a business credit card that won't report your company activities on your personal credit has its advantages. If you anticipate high spending, separating business and personal credit can keep your personal credit score from taking a dive due to high credit utilization. Since the balances you have on a business credit card won't display on your personal credit report, you won't see significant dips in your score if you have to make major purchases for your business. 

No late payments shown

If you have cash flow issues and miss a business card payment, you won't have to worry about a late payment mark on your personal credit report. Keep in mind that late payment may not make its way on your personal credit report. Still, American Express, Capital One and Chase may report more serious activities such as a business card delinquency on your personal credit file. 

Open account

Credit card companies that check your personal credit may not report its activity but could still show the account on your personal credit file. This could be an advantage because the age of the account and the credit limit can boost your credit score without the negatives of payment history.

Disadvantages of business cards that don't report to your personal credit

Although there are advantages to choosing a business credit card that doesn't affect your personal credit score, some drawbacks are considered.

Missed payment history opportunity

If you're still building your personal credit score, spending less on your personal cards (or not at all) and making good payments to your business credit cards only helps your company's credit standing. 

You're not fully in the clear

Even if a card company does not report your payment history to the consumer credit bureaus, they may still report serious negative activity such as delinquency, collections or charge off. You're trading the opportunity to build your personal credit for the perks of a business card. However, you're still potentially at risk of damaging your consumer credit score if your business fails. 

FAQs

Who can apply for a business credit card?

You don't have to have a corporation to apply for a business credit card. If you're just getting started on a business idea, work as a freelancer, sell goods online or work rideshare or food-delivery gigs, you could apply for a business credit card.

Are there business credit cards available that don't require a personal guarantee?

Business credit cards exclusively rely on your business credit and won't look at your personal credit history. However, your company will need to have an established track record and be able to present financials, such as business tax returns, profit and loss reports and business bank statements.

Brex, Stripe, Silicon Valley Bank and Ramp offer business credit cards with no personal guarantee. Your bank or credit union may also offer one.

Is business credit different from personal credit?

Business credit and personal credit are different. The top consumer credit-reporting agencies are Experian, Equifax and Transunion, providing a personal credit score of up to 850. For business credit, Dun & Bradstreet is the main bureau, although Experian and Equifax have business-credit divisions. Business credit is scored from 0 to 100. 

Although business and personal credit are different, they may be tied together if you choose a business credit card or loan that requires a personal guarantee but only reports payment history to the business credit bureaus. In addition, some business credit cards report to your personal credit report.