One of the most difficult things that consumers face when improving their credit score is paying off their credit cards and understanding how their credit activity is scored. Fortunately, there are tools that can help you create a pathway toward becoming debt-free such as this debt consolidation calculator.
Before you create a strategy for paying off your debt, you should know that personal credit cards aren’t the only debt that can affect your personal credit score. Some business credit cards can also count towards your overall score. So how can you know which card will work best for your small business or side hustle that won’t count toward your personal credit score? This guide will help you determine whether your business activity also affects your personal credit.
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How business cards affect your credit score
Every major credit card company has a product line tailored for business owners, including business checking and credit cards. However, the way they each report to the credit bureaus varies.
For the most part, the only time you’ll need to worry about a business card affecting your credit score is when there’s negative activity to report, such as late payments or going over your limit. However, there are nuances to how your information will be reported, so here’s a breakdown for each major creditor.
American Express cards are typically charge cards and not credit cards, meaning your balance must be paid off in full every month. However, there are a few select credit cards they offer and may have promotions where they’ll let account holders in good standing pay for large purchases over time.
Since their main products are charge cards, both their personal and business cards are not reported to the credit bureaus unless there’s negative activity.
Bank of America
Bank of America does not report any business activity to the personal credit bureaus.
Capital One reported that they’ve ceased reporting any business activity to the consumer bureaus for cards opened after 2020.
Chase claims they do not report business cards to consumer credit bureaus unless the account is “seriously delinquent.” However, users have reported seeing their business card balances on soft pulls of their credit reports.
Citi does not report its business accounts to consumer credit bureaus.
Discover reports its business accounts to both consumer and commercial credit bureaus.
U.S. Bank does not report its business accounts to consumer credit bureaus unless the account is “seriously delinquent.”
Wells Fargo does not report its business accounts to consumer credit bureaus.
Should you get a business credit card?
Small business and corporate credit cards are designed to be used by entrepreneurs, freelancers, or small business owners and will often have perks tailored for business-related purchases like shipping or office supplies.
Many business cards will also offer extra insurance and protection for cell phones that have their monthly plan paid for by the card.
While you will need a legal business to open a card, it’s not very difficult to show proof so long as you’ve had some sort of business activity, i.e., a paid invoice for your company. Freelancers may need to answer a few additional questions over the phone, but most credit card companies are lenient with the proof you’ll need to show as long as your credit score is high.
A business credit card can be a great way to manage your expenses, build business credit, and protect your personal credit. The most important thing to do when using a business credit card is to pay it off in full every month. That ensures that you’ll never pay interest and avoid damaging your personal credit.