How Does a Business Credit Card Affect My Credit?

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Business owners use business credit cards for many reasons. For starters, using a business credit card allows people to separate their personal and work expenses, which can make it easier to organize finances and manage bookkeeping. Business credit cards also have some nice perks that consumer credit cards may not offer, making them handy tools for frugal and strategic business owners. (Here’s an expert guide to choosing a business credit card that works for you.)

But business credit cards aren’t always totally separate from your personal credit. That card’s impact on your consumer credit rating depends on the card issuer and the state of your business’ credit standing.

Say you’re just starting a new business, so it doesn’t have any credit history for a creditor to evaluate. When you apply for a business credit card, the issuer will likely request your consumer credit report to determine whether or not to approve you. Even then, the card activity won’t necessarily show up on your personal credit report, unless you default on the credit card payments. Payment history is a crucial component of credit scoring.

“Eventually, they will get away from your personal credit,” said Garrett Sutton, author of “Start Your Own Corporation” and “Finance Your Own Business.” So you may have to start out getting a business credit card based on your personal credit history, but using it well will help you establish a strong business credit history for future creditors to review when applying for business loans or other credit.

Again, it depends on what card you have. “Some of the business credit cards are going to want you to co-sign personally,” and some will not, Sutton said.

Sutton said at least one major issuer will report all business credit card activity to your personal credit report (though it’s listed as a business account), while others won’t report activity on consumer credit reports unless there’s a default.

“If reported, the accounts would affect scores in the same way as any other revolving account,” Rod Griffin, Experian’s director of public education, said in an email.

Because you could be personally responsible for the card activity, it’s a good idea to closely monitor purchases any employees make with a company card. On top of that, fraud protections on business credit cards differ from those on consumer cards, which often have zero fraud liability policies. Just like you would with a personal credit card, it’s crucial to manage business credit carefully, so you can keep your credit scores in good shape. You can see how your credit card use affects your personal credit scores by reviewing your free credit report summary from Credit.com, updated every 30 days.

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