Peace and blessings. This is Kinji Ridley, aka “The Wealth Builder” with your monthly Business and Financial Advising tip. Last month, we discussed why every business needs Business Credit. This month, we’re going to talk about one form of obtaining business credit-Personally Guaranteed Business Credit. Nearly all small-business cards require a personal guarantee, but not all of them report to consumer credit bureaus.
If you’re trying to keep your business or side hustle completely separate from your personal finances, it might make your stomach sink to see your business credit card show up on your personal credit report. That’s because it means your credit score could suffer because of high debt or a late payment on the business card.
Entrepreneurs may be able to reduce that risk by using a card that doesn’t report account activity to consumer credit bureaus. Some business credit cards report only to commercial credit bureaus, not consumer credit bureaus. Some report to consumer bureaus only if you fall way behind on your payments.
It’s important to note that even when business card activity is reported to consumer credit bureaus, it affects only the credit of the primary cardholder — the entrepreneur who applied for the card and personally guaranteed the debt on the account. Employees who carry company-issued credit cards–generally won’t see the activity appear on their personal credit reports.
Further, even if the card doesn’t report to consumer bureaus, the personal guarantee remains in effect: The entrepreneur is on the hook for the debt on the account. If that debt goes unpaid and ends up in collections or court, that could be reflected on the cardholder’s personal credit report and damage their credit scores.
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Thank you for reading Kinji Ridley’s article on scoopnewsusa.com. For more on “Do business credit cards affect personal credit score?”, please subscribe to SCOOP USA Media. Print subscriptions are $75 and online subscriptions (Print, Digital, and VIZION) are $90. (52 weeks / 1 year).
