The answer to this question depends on what credit card issuer you use, how you use it and whether the business card issuer reports all or some of your card activity to one or more of the three major credit bureaus. Regardless of which issuer you choose, the important thing is that you pay your bill on time every month and keep your balances low.
Whether your business card affects your personal credit score is an individual decision that you must make yourself. However, there are certain things you can do to minimize the impact that a business credit card may have on your personal score.
- Avoid Using Your Personal Credit Cards for Business Activities
It can be difficult to separate personal and business expenses, especially when you’re working as an employee for an employer who has a corporate credit card. For example, if you charge business travel expenses on a personal credit card, your company will reimburse you later, but you can expect those charges to linger on your credit report for several months. This can cause a significant increase in your personal credit utilization ratio, which can hurt your personal credit score.
- Consider Using a Business Credit Card that Does Not Report to Your Personal Credit
Many issuers, such as Citi, Wells Fargo and U.S. Bank, do not report any business card activity to your personal credit report. In addition, most issuers do not report to the Small Business Financial Exchange.
- Avoid Applying for New Cards While Your Personal Credit Is Frozen
When applying for a business credit card, lenders will often conduct a hard credit inquiry into your personal credit. This will ding your credit score by a few points. While this is a temporary drop, it’s important to be prepared for it.
- When You’re a Corporate Credit Cardholder
If your company provides you with a credit card, you’ll be responsible for managing it. The issuer will check your credit before approving the credit card, but the usage and payment information will be reported on your company’s credit report.
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- Having an Authorized User On Your Business Credit Card
If you’re a business owner with a company credit card, it can be tempting to let your employees use it to charge business expenses. If you’re a primary cardholder, this can have a large impact on your credit score. If you’re an authorized user on your company’s credit card, however, it will not have a significant impact on your personal credit.
- If You’re a Business Owner and Have a Personal Credit Card
Most business owners sign up for a business credit card with the same personal guarantee as they do their personal credit cards. This means that if the business fails to pay the account on time, you could be held personally liable.
Using a business credit card that does not report to your personal credit is the best option for building your business credit score. Some credit card issuers report a percentage of business card activity to the consumer credit bureaus, but it’s still better to avoid them altogether. The only exception is if you have employees who can access your company credit card as authorized users.