How Business Credit Cards Affect Your Personal Credit

Media / Blog

How Business Credit Cards Affect Your Personal Credit


Your Taxes Will Go Up If Earn Less Than $250,000

January 25, 2012

Forming a new LLC, S-Corp, or C-Corp can be intimidating. Not only will you have to navigate the fees, taxes, and filing requirements, but also learn how to build credit history from scratch for this new entity.

One of the most common ways people do this is to apply for business credit cards. But guess what? Those might not help your business credit – and sometimes – it can even hurt your personal credit. Here are five caveats you need to know about.

#1. Banks require personal guarantees

Nowadays all of the business credit cards on the market require a personal guarantee. That means you will have to apply with your Social Security number. Approval (or denial) will be based upon your personal credit history and if anything goes wrong with the account after it’s opened, it will show up on your personal credit report.

Is it possible to get a business card without a personal guarantee? Sure, but there are some mighty steep requirements that will have to be met. All of the major card issuers like Citi, Bank of America, American Express, etc. typically require the company to have $5 million in revenue and 2+ years of solid operating history. So obviously, a new business won’t qualify!

#2. Not all cards can help business credit

All business cards report to Dunn & Bradstreet, right? Wrong!

Many people make this assumption, only to find out later their card is nowhere to be seen on their business credit report. In fact, I actually made this mistake years ago with my Business Gold Card. I applied thinking it would help build credit for my LLC, only to later discover that American Express does not report their small business OPEN cards to D&B. So it was great for benefits, but bad for credit building.

Some of the more popular cards that usually do report to D&B include the Chase Ink, Capital One Spark, and the store cards from Staples, Office Depot, and 76 gas stations.

#3. Some cards show up on your personal credit

As I mentioned in #1, giving a personal guarantee is practically inevitable. But with most issuers, the business account will never show up on your personal credit file, assuming the bills remained paid (or in other words, as long as you don’t default).

However with some business credit cards, they will be fully reported to your personal credit even if your account is within good standing. That’s probably a good thing if you don’t carry any debt. But if you have a large balance on your business account, then that can adversely affect the debt to credit ratio for your personal credit score.

Conclusion? If you won’t ever be carrying a balance, then don’t worry if the account shows up on your personal credit. But if you will be carrying a balance (and having a high debt to credit ratio) it would probably be best to find a business card that will not report to your personal. One such card is the Chase Ink; I’ve had it for almost a year and it has never shown up on my personal report.

#4. Don’t forget about the credit inquiry

Regardless of whether or not the card will show up on your personal credit report, one thing is for sure… at the time of the application, a credit inquiry will be made and that will show up.

If you don’t plan on applying for a loan or mortgage within the next 12 months, then don’t sweat it (they remain on your report for 24 months, but can only impact your score during the first 12). However if you’re contemplating a loan in the near future, then you may want to think twice about getting your business card now, if you already have several recent credit inquiries on file.

#5. A credit card isn’t always the best idea

Let’s be honest here… do you spend too much? If you’ve had problems overspending and raking up debt on personal credit cards, then what makes you think you will be able to handle a business account any better?

Even though [some] credit cards can be a good way to build business credit, they definitely aren’t the best option for everybody. If there’s a chance you will get into trouble with them, then you may want to consider other options.

For example, many banks and credit unions will allow new businesses to take out a secured loan. You might put up, say a $5,000 CD, and in exchange they will loan you $5,000. Obviously this may seem pointless since you are borrowing money from yourself, but for some types of businesses it’s worth the cost if it will help build credit.

This article was written by Michael, the president of CreditCardForum. There you will find a listing of his favorite small business cards.

Visit to to request a free consultation with the leading financial experts for people in their 20’s, 30’s, and 40’s in the country.


The Words We Don’t Want To Hear: “You May Need To Save More”

Sign Up

Sign up for our exclusive Sunday Paper with a weekly market commentary, insightful personal finance blogs, and life changing education guides.

Email sign up

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.