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Do Business Credit Cards Affect Personal Credit Score?
Most issuers only report business card activity to commercial credit bureaus.
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Claire Tsosie is an assigning editor for NerdWallet. Her areas of expertise include research and strategy. She’s edited articles on a variety of topics, including business software, Medicare and home improvement. Previously, she was a credit cards writer at NerdWallet for over five years. Her work was featured by Forbes, USA Today and The Associated Press. She's been a speaker at both CardCon (2017, 2018) and FinCon (2019). Email: <a href="mailto:claire@nerdwallet.com">claire@nerdwallet.com</a>.
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Kelsey Sheehy is a NerdWallet authority on small business. Her work has appeared in The New York Times, USA Today and The Associated Press, where she writes a column about millennials and money. Kelsey has appeared on the <a href="https://www.today.com/video/christmas-in-july-sales-to-take-advantage-of-now-64075333536">"Today"</a> show, <a href="https://www.nbcnews.com/nightly-news/video/tax-code-changes-leave-many-americans-with-unhappy-returns-1440385091860">NBC News</a> and <a href="https://abcnews.go.com/WNT/video/cost-smartphones-reaching-time-high-54166111">"ABC World News Tonight"</a> and has been quoted by the Los Angeles Times, CNBC and MarketWatch, among other publications. Email: <a href="mailto:ksheehy@nerdwallet.com">ksheehy@nerdwallet.com</a>.
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A business credit card is a great tool to separate your business and personal finances and establish your business credit history. But applying for and using a business card could impact your personal credit score, depending on the card and how you use it.
How business cards affect personal credit
Applying for a small-business credit card will likely result in an immediate, albeit temporary, hit to your personal credit score due to a hard inquiry from the card issuer. This is usually small and short-lived.
That’s because card issuers typically rely on your personal credit for approval, even on business cards. Most also require a personal guarantee that says you’ll repay the debt if your business fails, so your personal credit history helps issuers assess their risk.
Beyond the initial hard inquiry, most business cards only report activity to commercial credit bureaus. The one exception: negative payment history.
Several business credit card issuers will report late payments and serious delinquencies to consumer credit bureaus. This will negatively impact your personal credit.
Which card issuers report to consumer credit bureaus?
NerdWallet reached out to representatives from nine major credit card issuers and asked how they report business credit card activity. Here’s what we found out:
Does the issuer report small-business credit card activity to consumer credit bureaus?
Does the issuer report small-business credit card activity to commercial credit bureaus?
American Express
Yes, but only negative information.
Yes.
Bank of America
No.
Yes.
BBVA
No.
No.
Capital One
Yes, for some cards.
Yes.
Chase
No, unless the account is seriously delinquent.
Yes.
Citi
No.
Yes.
Discover
Yes.
Yes.
U.S. Bank
No, unless the account is seriously delinquent.
Yes.
Wells Fargo
No.
Yes.
When business card activity is reported to consumer credit bureaus, it affects only the credit of the primary cardholder — the individual who applied for the card and personally guaranteed the debt on the account. Employees who carry company-issued credit cards generally won't see the activity appear on their personal credit reports.
Even if the card doesn't report to consumer bureaus, the personal guarantee remains in effect: The primary cardholder is on the hook for the debt on the account. If that debt goes unpaid and ends up in collections or court, that could be reflected on the cardholder's personal credit report and damage their credit scores.
Lines between personal and business can blur
When business credit card activity shows up on your credit reports, it’s treated the same as any other credit card debt by both the FICO and VantageScore credit scoring methods. Data from that account will affect your length of credit history, credit utilization and payment history, among other factors.
Assuming you have a card that reports to both commercial and consumer credit bureaus, what should you expect?
If you pay on time and stay well under your limit: The account may help both your personal and business credit scores. This could make it easier to qualify for loans on good terms and negotiate government contracts.
If you miss a payment or use too much available credit: The account could hurt both your personal and business credit scores. Even if you close your card, its history could stay on your personal credit reports for up to 10 years.
Should I get a business card that doesn't affect personal credit?
If you can imagine making a few slip-ups with business credit, you might want to get a card that doesn’t report to consumer credit bureaus as a precaution. But generally, it's a better idea to apply for the card that offers the rewards and benefits you’re most interested in, instead of focusing on the card’s reporting policy.
It’s important to be mindful of how your business credit card affects your personal credit. But don’t make the mistake of thinking you can get rid of all your personal liability by choosing a business credit card that doesn't report to consumer credit bureaus. If you want to protect your personal assets, your best bet is to borrow sparingly and pay your bill on time, every time.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.