How Business Credit Cards Affect Your Personal Credit Score

Reporting can vary by issuer, so it's important to know before you apply

A business owner checks his credit score.
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There are a lot of reasons to apply for a business credit card. They're generally easier to get than some small business loans, they can help you build a business credit history, and you may be able to enjoy some valuable rewards and perks. 

Business credit cards can impact your personal credit score, though. Understanding those impacts can help you determine which card is the best for your small business.

How Do Business Credit Cards Affect You and Your Personal Credit Score?

Applying for and using a business credit card can affect your personal credit score depending on what you do with your card and the card issuer you make payments to (more on that later).

Application Process Includes a Hard Inquiry

When you apply for a business credit card, most card issuers will run a personal credit check to verify that you can make good on your personal guarantee.

According to FICO, each hard credit inquiry knocks fewer than five points off your credit score, so it won't have too much of an impact. However, if you apply for multiple credit cards in a short period of time, they can have a compounding negative effect on your score.

Most small business credit card issuers require a personal guarantee when you apply. This means that if your business can't make monthly payments, you pay for them out of your personal assets. 

Some Issuers Don’t Report to Credit Bureaus

Most major business credit card issuers either won't report your balance or payments to the consumer credit bureaus, or they only do so when you fall more than 30 days behind on a payment. In the event that an issuer reports one of these payments, your credit score is likely to drop.

Your payment history is the most important factor in your FICO credit score, even one missed payment can have a significant negative impact on your score and remain on your credit report for up to seven years.

But a Few Issuers Do Report to the Bureaus

A couple of well-known business credit card issuers report all of your activity to the consumer credit bureaus every month, just like your personal credit card issuers do on those accounts. 

The type of information they report may include your balance, credit limit, and payment history, all of which can change your credit score.

Even if your business makes all of its payments on time, having a high credit utilization rate (ratio of your balance to your credit limit) could negatively impact your personal credit score. Aim to keep your utilization rate below 30%.

Which Card Issuers Report Business Credit Card Information?

Among the major credit card issuers in the U.S., here's how you can expect your business card to affect your personal credit score.

Card Issuer When and What It Reports
American Express If the account is not in good standing
Bank of America If the account is delinquent
Barclays May report in certain circumstances
Capital One All account information on most cards
Chase If the account is more than 60 days delinquent
Citi Does not report
Discover Reports all account information
U.S. Bank Does not report
Wells Fargo Does not report

The Capital One Spark Cash for Business may report late payments, missed payments, and other defaults.

How To Improve Your Credit Score With a Business Credit Card

Although business credit cards aren't primarily designed to help you build personal credit, getting a card from a bank that reports all of your account activity to the consumer credit bureaus can help you build your personal credit history.

If you want to go this route, it's important to practice smart credit habits. The most important one is to pay your bill on time every month, preferably in full, to avoid interest charges. 

Also, make it a goal to keep your credit utilization rate low. Doing so may be difficult if your credit limit is low compared to what you need to spend on your card every month. If you anticipate you’ll need to carry a balance or frequently run up a high balance, you may want to choose a card from an issuer that won't report your activity to the consumer credit bureaus.