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Business credit cards are a great way for small business owners to keep business expenses completely separate from their personal expenses. Though business credit cards can help demarcate your expenses, your credit history may not be quite so separate. Until your company meets the criteria for a corporate credit card, your business credit cards is inextricably tied to your personal credit in one way or another. This starts from the very beginning, because every business credit card application includes a personal credit check. So, do business credit cards affect my credit score? Yes, absolutely. But that's not the only question to ask. Do business credit cards affect my credit score after I'm approved? That answer is a lot more complicated. We'll break it down. Business credit cards and the personal guaranteeSomething key to realize about business credit cards is that you, as the primary cardholder, are responsible for the debt. This is called a "personal guarantee," and it's found in the terms and conditions of virtually every business credit card. Personal guarantees are required for sole proprietors and LLCs alike. The game can change at corporate level, but that's an entirely different credit product. In other words, just because a credit card is in your business's name instead of your own doesn't mean you're off the hook for the balance -- or for the credit score damage if you're delinquent. The personal guarantee means tanking your business credit can also tank your personal credit score. That said, the day-to-day impacts of business credit cards on your personal credit score vary. Initially, the impact is minor. Because credit card issuers rely on your personal guarantee, they pull your credit report when you apply for business credit cards. This hard credit inquiry winds up on your personal credit report, likely dinging your credit score a few points. After you're approved, the effect your business credit cards have on your personal credit depends on which company issued your card. Some credit card issuers report your business card's activity to the consumer credit bureaus every month, exactly as they would a personal account. Other issuers don't report your balances or payment history unless your account becomes delinquent. Which issuers report business credit cards to consumer credit bureaus?Although your business credit cards always have some impact on your personal credit score, you can minimize the everyday influence of your business cards. Here is a look at which issuers are known to regularly report business credit card activity to consumer credit bureaus:
Of course, it's worth pointing out that this refers just to regular activity, like monthly balances. If your account becomes delinquent -- typically 30-plus days late -- any issuer is very likely to report your account as delinquent to both business and consumer credit agencies. Just as with a personal card, a delinquent business card account has a profound and long-lasting negative impact on your personal credit score. The potential credit score impacts from business credit cardsThere are several factors determining your credit score that can be impacted by a business credit card, including:
From the start, your business card influences your new credit factor thanks to the hard credit inquiry from the application. Your business credit cards reporting to your personal credit can have additional impacts, particularly in your account age. Scoring agencies look at the length of your overall credit history and the average age of all of your credit accounts. A new credit card, business or personal, decreases your average account age, thus decreasing your credit score. Credit utilizationCredit utilization can be especially impacted by a business credit card. Basically, credit scoring agencies look at how much credit you are using as a function of how much credit you have available, and this ratio is known as your utilization rate. If your issuer reports your business card balances to the consumer bureaus, the purchases you make for your company could increase your personal utilization rate. A high utilization rate can decrease your credit score, so your personal credit can suffer if you frequently make large purchases with your business credit cards. However, paying down your balance will help improve your credit score again. And if you rarely make large purchases, a business card added to your personal credit report could actually be good for your credit score. Don't be afraid of impacting your personal credit scoreEven the smallest of small businesses need access to credit. Though there can be a number of credit score impacts from business credit cards showing up on your personal credit report, most are minor -- so long as you're using your business cards responsibly. Below, we've listed three of our top-rated business credit cards. To see more, check out our full list of the Best Business Credit Cards. As of Oct. 18, 2022 American Express Business Gold Card Capital One Spark 1% Classic Card Rating image, 4.50 out of 5 stars. 4.50 stars
Info IconCircle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for
you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. Rating image, 4.00 out of 5 stars. 4.00 stars
Info IconCircle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for
you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. Rating image, 4.00 out of 5 stars. 4.00 stars
Info IconCircle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for
you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. Apply Now for Ink Business Unlimited® Credit Card On Chase's Secure Website. Read Review Read Review Read Full Review Credit Rating Requirement: Good/Excellent (670-850)
Info IconCircle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending
decisions. Credit Rating Requirement: Good/Excellent (670-850)
Info IconCircle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending
decisions. Credit Rating Requirement: Fair/New to Credit Under(669)
Info IconCircle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending
decisions. Welcome Offer:
Info IconCircle with letter I in it. Earn $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening. Earn $750 bonus cash back Welcome Offer:
Info IconCircle with letter I in it. 70,000 Membership Rewards® points after you spend $10,000 on eligible purchases with the Business Gold Card within the first 3 months of Card Membership 70,000 Membership Rewards® points Welcome Offer: N/A Rewards Program:
Info IconCircle with letter I in it. Earn unlimited 1.5% cash back on every purchase made for your business Unlimited 1.5% cash back Rewards Program:
Info IconCircle with letter I in it. 4 points per $1 in two categories where you spend most ($150,000 annual spending cap), 1 point per $1 on other purchases 1x - 4x points Rewards Program: 1% cash back Intro APR: Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A Intro APR: Purchases: N/A Balance Transfers: N/A Intro APR: Purchases: N/A Balance Transfers: N/A Regular APR: 15.49% - 21.49% Variable Regular APR: 16.49% - 24.49%, variable Regular APR: 28.49%, variable Annual Fee:
Info IconCircle with letter I in it. N/A $0 Annual Fee: $295 Annual Fee: $0 Highlights: Highlights: Highlights: Apply Now for Ink Business Unlimited® Credit Card On Chase's Secure Website. The information for the American Express Business Gold Card has been collected independently by The Ascent. The card details on this page have not been reviewed or provided by the card issuer. Will a business card affect my personal credit?Once you have a business credit card, the way you use it could affect your personal credit score. If your credit card issuer reports business card activity to the consumer credit bureaus, your balances and payment history could become part of your personal credit history.
Can my LLC affect my personal credit?Situations Affecting Personal Credit
There are a few situations when a bankruptcy filed by a corporation, limited partnership, or LLC might affect your personal credit report. If an LLC has debts in its name, only the credit of the LLC is affected. The exception is if a member of the LLC guarantees the loan.
Do business cards help build credit?Using a small-business credit card is one way you can build your business credit — but depending on the card issuer, it can affect your personal credit too, particularly if you fall behind on payments.
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Does a business credit card affect your personal credit score
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