Do Business Credit Cards Affect Your Personal Credit?

Do business credit cards affect your personal credit? In many cases, yes. The card you choose can have an impact on your credit, be it positive or negative. 

We examine which cards can affect personal credit, what you need to do to prevent your personal credit from being affected by your business activity, and how to tap into business credit solutions quickly. 

Business Credit Cards That Report to Personal Credit

Reporting Payments vs. Delinquencies

It’s important to note that not every business credit card may affect your personal credit in the same way. 

As illustrated above, business credit cards report both payments and delinquencies. 

Business credit cards that report payments can have a positive impact on your personal credit score. If you pay on time or early each month, that activity will go toward helping you boost your personal credit score. 

Unfortunately, most cards that report payments also report delinquencies to each consumer credit bureau. 

As you’ll well know if you’ve ever fallen into debt, late payments can wreak havoc on your personal credit score. 

Should your business have a few poor months or start failing, your personal credit score could be on the line. 

Even if it does seem like business credit cards that report to personal credit bureaus have an upside, the potential dangers of these business credit cards far outweigh the potential benefits. 

Don’t Get Business Credit Cards that Report to Personal Credit Bureaus

There are numerous reasons why you should avoid business credit cards that report to personal credit bureaus. 

• Your Business Activity Dictates Your Personal Financial Situation: The success of your business has a massive impact on your financial situation. If your business fails, your personal credit score goes along with it. 
• Your Life Could Change Through No Fault of Your Own: Whether economic factors or industry changes, your life could change through no fault of your own, even if you made all the right moves. 
• Acquiring Basic Needs Can Become Challenging: With damaged personal credit, it can be a challenge to get a mortgage for a home, rent an apartment, or buy a car. A low personal credit score may mean being turned away or worse terms for loans.

Keeping your personal finances and your business finances separate should be one of your main focuses when starting a small business. Never utilize credit solutions, like a business card, that could have a life-altering impact on areas of your personal life. 

Stick with business credit cards that do not report to personal credit. The right business credit card will help you maintain your peace of mind and fund your business. 

Credit Utilization Risks

Personal credit is influenced by several factors. 

One of these factors is your credit utilization. 

Credit utilization is crucial to improving your personal credit score and maintaining it. Your credit utilization should fall below 30%. 

So long as you don’t max out your credit cards and ensure you’re using less than 30% of the overall credit lines available to you, your personal credit score won’t be affected. 

But what happens when you add a business credit card to the mix? Let’s imagine, for example, that you’re approved for a business credit card with a $10,000 credit limit. 

In comparison to a personal credit card, the point of a business credit card is to utilize all of your available credit. With a personal credit card, you’d aim to use up to $3,000. With a business credit card, you want to take advantage of all the funding you’ve been extended. 

If you’re maxing out your business credit card, your credit utilization will look like it’s increased substantially to any personal credit bureaus that card is being reported to. Your new business card greatly sways your utilization. This then appears on your personal credit report.

Credit utilization doesn’t matter when you’re tapping into business credit. It won’t affect your business credit score. But if you’re using business credit cards that report activity to personal credit bureaus, your use of your available credit limit could impact your personal credit scores. 

This may vary depending on the business credit card as well. Consider what they’re actively reporting and whether that information could impact your personal credit score and personal credit history. Some business credit card activity may go unreported.

What’s the Upper Limit to Credit Cards?

The upper limit to credit cards depends on which credit cards you’re using. For example, if you’re using personal credit cards, you’ll likely want to stick to having three to five. The more you have, the more difficult they can be to manage. 

Business credit cards typically don’t have a limit. A small business might start out with one small business credit card or two cards. As you grow, you might be able to effectively manage over 20. 

Speaking to the credit limits of business cards vs personal cards, business credit cards offer a much higher credit limit. A business credit card can offer you tens of thousands of dollars of revolving credit. 

Your credit scores and credit history will play a role in how much is offered to you in both cases, with exceptions.

You should never use personal cards or personal loans to fund your business. Doing so puts your assets and your credit at risk. It also limits your ability to use your credit to its full potential and tap into the credit limits you need to scale effectively.

Only use cards from a credit card issuer that will affect your business credit report.

How to Avoid Using Personal Credit

It’s more than possible to avoid using personal credit when funding your business. However, it’s also a multi-pronged approach. If you want to protect your personal credit, you will need to:

Utilize Credit Solutions That Only Consider Business Credit (At First)

While there are numerous business credit cards and other credit solutions that will ask for your SSN, there are others that will look into your business credit score only. They won’t report to any personal credit bureau either.

Corporate credit cards, credit builder cards, small business loan products, and net 30 vendor accounts are a few examples. 

A corporate card doesn’t consider your credit scores or credit history. Rather, a corporate card will focus on business revenue and similar factors. Beyond a corporate card, a credit builder product will help you circumvent traditional eligibility challenges. 

You can easily find the best business credit cards with EIN only to start your journey.

Using solely your business credit score will enable you to avoid personal credit checks and personal credit reporting. 

Build Your Business Credit to Easily Qualify for Business Credit Cards

Qualifying for certain business credit cards without relying on personal credit requires you to have stellar business credit. 

Building business credit is the best way to avoid personal credit while allowing you to tap into the business credit products that offer the funding and terms you desire. All you need are solutions that report to each major business credit bureau.

You can start with tier 1 business credit solutions like net 30 vendors. With the right approach, you can start accessing hundreds of thousands of dollars of funding within a year or two. Credit Suite is one effective way to boost your business credit score with ease. 

Carefully Review Terms and Select the Right Solutions

As demonstrated above, you might not be aware of how certain credit solutions like business credit cards could affect your personal credit. 

As you apply for different business credit cards, loans, and beyond, take care to review the terms and make sure that you’re able to keep your personal credit and your business credit separate. 

Signing up for the wrong credit card and encountering financial challenges in your business could prove dangerous for your personal credit if you’re not making the right card choices. Be diligent when researching business cards. 

Build Business Credit with Credit Suite

Building business credit can be challenging for small business owners. Where do you start? Which business cards do you sign up for? What approach do you take to build business credit fast? 

If you need support in your business credit journey, Credit Suite can help you. 

Credit Suite’s Fundability System helps you build business credit by:

• Giving you a greater understanding of which factors impact business credit and where your business needs to improve in order to get approved. 
• Providing you with step-by-step guidance to generate real results and help you get funded. 
• Supporting you with our extensive list of vendors and lenders. We recommend those you would most likely qualify for to streamline your funding needs. 
• Assisting you with one-on-one support when you need it. 

If you’re looking to fund your business with credit cards but are being turned away by banks, you can also take advantage of credit card stacking. 

Our credit card stacking program can help you get up to $150,000 in unsecured, no-doc business credit card funding with 0% interest for 6 to 18 months. 

Get started with Credit Suite today!