Does Your Business Credit Card Impact Your Personal Credit?

Business credit cards can impact your personal credit in a few ways.

Applying for a business credit card adds a hard credit inquiry to your credit report, which can lower your personal credit score by a few points temporarily. Missed payments or delinquent business accounts may also be reported to the consumer credit bureaus.

Business credit cards may also require a personal guarantee to qualify. The cardholder is responsible for repaying account charges, even if the business is unable to pay. This can impact your personal credit if you have trouble covering business expenses.

Let's walk through the ways your business credit card may impact your personal credit.

What is a business credit score?

Business credit scores are separate from personal credit scores. They estimate a business’s creditworthiness and risk. There are several different business scores and, unlike personal credit scores, which mostly fall between 300 and 850, business credit score ranges aren't standardized and can vary depending on the scoring model.

Some factors that can shape business credit scores include:

• Business age: More established businesses may be perceived as more creditworthy.
• Payment history: As with your personal credit score, payment history can heavily impact your business credit score.
• Collections and/or tax liens: Unmet financial obligations, like accounts sent to collections, can negatively impact business credit.
• Number of credit inquiries and accounts: Multiple applications or new accounts in a short time period may indicate financial instability to lenders.

How your business credit card may impact your personal credit

When you apply for a business credit card, issuers may use your personal credit to evaluate your application. If your business credit card issuer reports to the consumer credit bureaus, that activity may impact your personal credit score.

Keep in mind that this generally applies to the primary accountholder. Authorized users, like those with an employee card, typically won’t see their personal credit affected by the usage of a company-issued credit card.

There are a few ways your business credit card may impact your personal credit:

• New credit inquiry: Depending on the issuer, applying for a business credit card may add a hard credit inquiry to your credit report. This can have a small impact on your personal credit score, but that impact is generally limited to a year. The inquiry would fall off your report after two years.
• Personal guarantee: Most business credit cards require a personal guarantee to qualify. This means the cardholder is personally responsible for repaying account charges, including employee card charges. If you can’t pay your balance, that could impact your personal credit.
• Late payments and delinquencies: Some business card issuers may report negative information to the consumer credit bureaus. Some issuers may only report negative activity, like late payments and delinquent accounts, to the consumer credit bureaus.