How business credit cards may affect your personal credit score
Quick insights
- When banks run a personal credit check, they typically look at factors such as your credit score, payment history and debt obligations to gauge creditworthiness.
- Business credit cards with personal liability may share your credit account information with credit bureaus.
- Whether a bank will run a personal credit check is contingent on the type of credit card you apply for and the financial institution’s reporting practices.
Have you ever wondered why some financial institutions run a personal credit check when you’re trying to get a business credit card? If you are personally liable for the business card, then a financial institution may want to review your ability to repay the business card and understand how responsible you are with managing money. Business credit cards may be a great financing option to help you cover expenditures and access capital for reinvestment into a business. Depending on the financial institution and if the business card has personal liability, some business credit cards have the potential to impact your personal credit score.
Will issuers do a hard pull on my personal credit report when I apply for a business credit card?
It varies depending on the financial institution. For business credit cards with personal liability, the primary cardholder is personally liable for the debt. In this scenario, credit card issuers typically perform a hard inquiry on your personal credit report when you apply for a business credit card. One of the reasons credit card issuers do a hard pull is to assess your creditworthiness and determine your credit limit and interest rate.
Can business credit cards impact my personal credit score?
It depends on the credit card issuer and the type of credit card. If you have a business credit card with personal liability and the financial institution furnishes (shares) information to credit bureaus, then it could impact your credit score. If you have a business credit card that doesn’t have personal liability, the business is liable for the debt, and the information will typically not be reported to consumer bureaus.
Do business credit cards report to credit bureaus?
Business credit cards with personal liability may report to credit bureaus. It might be a good idea to check with your specific issuer to understand their reporting practices.
Can I get a business credit card that doesn’t report to consumer credit bureaus?
When comparing the terms of business credit cards, you might consider cards that don't report to consumer credit bureaus or cards that do not require a personal guarantee.
In summary
Overall, whether a bank will run a personal credit check is contingent on the type of credit card you apply for and the financial institution’s reporting practices.
