Do Business Credit Cards Affect Personal Credit?

Do Business Credit Cards Affect Personal Credit

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The hard truth is that business credit cards can affect your personal credit. 

Let’s take a closer look at how it could occur and what you can do to keep your score in good standing. 

How Business Credit Cards Affect Your Personal Credit

1. Applications Give a Hard Inquiry

In short: soft credit pulls do not have an affect on your credit score, but hard pulls do.

Applying for your first business credit card will require a lender to check your personal credit score. 

When this happens, it will result in a hard inquiry. 

Hard inquiries occur when you apply for a new line of credit, such as a credit card, car loan, or mortgage loan. 

This can bring your score down a few points. But it shouldn’t be too great of a concern if your personal credit is in good standing. 

If you have a lower score, however, hard inquiries can lower your credit score even more. This is especially true if you end up applying for multiple business credit cards over a brief period of time. 

Keep this in mind before you begin applying for the best cards for your business needs.

2. Late or Missed Payments & Delinquencies

Staying on top of your payments ensures your credit stays in good standing. It’s a reward unto itself. 

However, it can be important for another reason entirely. 

Most business credit cards don’t intertwine with your personal credit. But that’s not always the case. 

Some business credit cards will actually report to personal credit bureaus if you miss a scheduled payment. 

This has serious ramifications for your personal finances as well as your business credit history. 

Check the terms and conditions of your chosen business credit card before applying to ensure the best possible outcome. 

Do All Business Credit Card Activities Affect Personal Credit?

This is a two-pronged question that requires a better overview of how certain business credit cards work and what to consider. 

The reality is that not all business card activities will affect personal credit. 

Therefore, you may not have to worry about business credit impacting personal credit. 

But if you do choose a business credit card that reports to the bureaus, there are two potential scenarios. 

First, you may have a business credit card that only reports missed payments to credit bureaus. As long as you avoid late or missing payments entirely, the impact will be negligible. 

On the flip side, there are some cards that will report positive activity to credit bureaus. This can be an asset if you’re trying to strengthen personal credit. But it can also hurt your personal credit, especially if you keep high balances on your business credit cards. 

If you are in the market for a business card, it’s generally better that you don’t get one that reports to your personal credit. 

Business Credit Card Issuers That Report to Personal Credit Bureaus

Knowing which card to look for can make building your business credit simple. 

Here’s a list of issuers to be aware of: 

Credit Card IssuerPositive Activity Reported To Personal CreditNegative Activity Reported To Personal Credit
American Express
Bank of America
Capital One
U.S. Bank
Wells Fargo

Whether you want your business and personal credit separate or not, this list will help you find the right credit card for your needs.

How To Improve Your Credit Score With Business Credit Cards

Your business and personal credit scores matter. 

Staying on top of them is as simple as sticking to a few key rules while you’re using your new business credit cards. 

Here are some ways to improve your credit score with business credit cards: 

  • Start Small: If your business credit cards report activity to the personal credit bureaus, use them less aggressively. Never use more than 30% of your available credit and start with small purchases to develop a payment history. 
  • Make On Time Payments: Never miss a payment. Missed payments will hurt your score and make you look unreliable to lenders.
  • Get Cards That Don’t Report to Personal Credit: This will protect your personal credit and keep it separate from your business activities.

If your credit score is low, it’s worth considering waiting until your score is within the right range to fill out an application. 

Applying for credit with a lower credit score means having fewer options at your disposal and can result in higher interest rates.

Becoming a business owner means having everything squared away before you get started. Going in with a strong personal credit score can be a necessary first step. 

Many businesses need at least one business credit card. That’s why managing your credit is essential. If you mismanage it, you’ll lose a valuable capital source for your business. 

The guide above will help you better understand to what degree your business credit card activity can affect you. With this information, you can take the next steps and apply for your desired card with minimal problems in the future.

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