Whether you’re running a small business with a dozen employees or just starting a solo entrepreneurial venture, keeping your personal and business finances separate feels like a no-brainer. It’s not always that simple.
You probably have dozens of questions. What’s the best way to file your business taxes? Should you get a business credit card to manage your expenses? And do business credit cards affect personal credit?
The answer to the last question depends on factors, like how your card is set up, if you’ve provided a personal guarantee, and how responsibly you handle payments. Here’s an introduction to how business credit cards can impact your personal credit and what you need to keep in mind.
What is business credit, and how does it work?
A business credit is the record of a company’s ability to borrow and repay money. Business
credit scores reflect a company’s financial behavior, just like a personal credit score.
Lenders report financial activity to these accounts to business credit bureaus — such as Dun & Bradstreet, Equifax Business, and Experian Business — to keep a record of how a business manages finances. That includes payments on loans, credit cards, and any outstanding debts.
Building a strong business credit profile may help unlock better financing options, higher credit limits, and more favorable payment terms.
How does business credit work?
When you apply for a business credit card or business loan, lenders primarily look at your business credit rather than your personal credit. This is important because it separates your business’s financial activity from your personal finances.
Here are some key factors that influence business credit:
Payment history. Paying your business bills on time is crucial for
building a good score. Missed payments or late fees hurt it.
Credit utilization. The lower your ratio of outstanding debt to available credit, the better. High credit usage can signal financial strain.
Credit history. A longer track record of responsible credit use may help strengthen your business credit profile, though it may take time if your business is new.
Debt levels. Carrying excessive debt can lower your score. Lenders view businesses that manage debt well favorably. If you're struggling,
credit counseling can help you better manage debt to help improve your score.
Public records. Any legal issues, like bankruptcies or liens, appear on a business credit report and negatively impact the score.
Business credit versus personal credit
So is your business credit separate from personal credit? The answer is usually yes, but not always. In some situations — especially if your business is new or doesn't have a strong credit history — lenders may still look at your personal credit score. It also depends on where your lender reports, since some might only report to business credit bureaus, while others might report to both.
Plus, if your business doesn’t have much credit history, lenders may use your personal credit score to assess your ability to repay debts. They might also require a personal guarantee, which holds you personally liable for the debt, if your business can’t pay it off.
It’s generally helpful to separate your
business bank account from your personal bank account to keep financial records as clear as possible. Mixing the two may complicate your financial situation and make tracking the business’s credit activity harder, especially when it’s reporting to a personal bureau. This distinction also applies to business vs personal credit cards, so it’s a good practice to use your business card for business expenses.
How can business credit cards impact your personal credit score?
Depending on how you manage it, your business credit card could either help or potentially hurt your personal credit. Here’s how.
Hard credit inquiries
When you apply for a business credit card, the issuer might check your personal credit score through a hard inquiry. This may cause a slight dip in your personal credit score, but don’t stress — it’s usually just a temporary hit. The key is to try to avoid applying for too many cards in a short period, as that can lead to a bigger drop.
Credit utilization ratio
Your credit utilization — how much of your available credit you’re using — plays a big role in your credit score. If your business credit card issuer reports your business card activity to personal credit bureaus, carrying high balances can increase your credit utilization ratio, which may hurt your personal credit score.
To maintain
excellent credit, keep your balances low and your credit utilization ratio under 30%. This helps protect your credit score and ensures you’re not over-leveraging business credit.
Payment history
Paying on time is key for both your business and personal credit scores. If your business credit card issuer reports to the personal credit bureaus, missing payments or paying late can negatively impact your personal credit score. But if you stay on top of payments, you can help improve
your credit score over time, which is a win-win for both your personal and business finances.
It's also important to regularly monitor your payment history for
credit card fraud. Fraudulent charges, if not detected early, may hurt your credit profile and leave you responsible for charges you didn’t make. Catching suspicious activity quickly protects your finances and prevents damage to your credit.
Personal guarantees
Some business credit cards require a personal guarantee, meaning you sign off on being personally responsible for any unpaid debt. If your business can’t pay off its balance, you’ll be on the hook, and that hurts your personal credit score. Be careful with this. While it can help you get a business card, it could also add a layer of risk to your personal finances.
Which business credit cards report to personal credit bureaus?
Here’s a breakdown of major credit card issuers and whether they report business credit activity to personal credit bureaus.
Issuer | Reports to personal credit bureaus? | Impact on personal credit |
American Express | Yes, but only negative information | If you miss payments or carry high balances, American Express will report it. This could hurt your personal credit score. |
Bank of America | No | Bank of America doesn’t report business credit activity to personal bureaus, so your personal credit remains unaffected unless you personally guarantee the debt. |
Capital One | Yes | Capital One reports payment activity, so missed payments or high credit usage can negatively affect your personal credit score. |
Chase | Yes, if the account is delinquent | Chase will only report to personal bureaus if your account becomes delinquent. Missing payments could negatively impact your personal credit score. |
Citi | No | Citi doesn’t report to personal credit bureaus, so your personal credit remains safe unless you personally guarantee the debt. |
Discover | Yes | Discover reports credit activity, and late payments or high balances could impact your personal credit score. |
U.S. Bank | Yes, if the account is delinquent | U.S. Bank reports only if your account becomes delinquent, which can hurt your personal credit score if you fall behind. |
Wells Fargo | No | Wells Fargo doesn’t report business card activity to personal bureaus, but missed payments can affect your personal credit if you have a personal guarantee. |
Note: The reporting practices can vary depending on the type of card and the personal guarantee attached to it. It's always best to review your specific card's terms to understand how your payments are reported.
How business credit cards appear on your credit report
When you start using a business credit card, you might assume your personal and business finances are completely separate. But some business card activity can show up on your credit report and impact your personal credit score. Here’s how that works:
Balances and credit utilization. If your business credit card issuer reports to the personal credit bureaus, the balance on your card can impact your credit utilization. If you’re using too much of your available credit, it might look like you're overextended.
Credit limit. Your business credit card's credit limit may also appear on your personal credit report. A higher limit can help your credit score if you manage it well and don’t max it out.
Payment history. If your business card issuer reports to consumer credit bureaus, your payment history could show up on your personal report. Missed payments or late fees harm your credit score, even if the card is for business expenses.
Impact on your credit score. Issuers like American Express and Capital One report business credit card activity to personal credit bureaus, meaning balances, limits, and payments factor into your personal credit score.
Is it a good idea to get a business credit card?
So, should you get a business credit card? Here’s when it’s a good idea — and when it might not be.
A business credit card is a good idea if:
You want to better separate business and personal finances
You regularly have business expenses to manage
You hope to build a business credit history
You’re comfortable managing multiple credit cards
You want to take advantage of rewards from business purchases
A business credit card might not be the best choice if:
Your business is new and doesn’t have a steady income
You’re concerned about the potential impact on your personal credit
Your business expenses aren’t enough to justify the fees
You struggle to pay off the monthly balance, which could lead to high-interest debt
Take control of your credit with EarnIn
Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out. Your VantageScore 3.0 from Experian® indicates your credit risk level and is not used by all lenders, so don’t be surprised if your lender uses a score that’s different from your VantageScore 3.0.
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