Choosing Business Credit Cards that Report
When choosing a credit card company for your business, the secret formula for building business credit lies in considering whether they report to consumer credit reporting agencies, business credit reporting agencies, or neither. As a business owner, it’s beneficial to look for credit cards that specifically report to business credit bureaus. Using consumer credit cards may negatively impact your company’s credit score, since they make up a significant portion of your personal FICO score, around 30%. A prime example is the Capital One Spark card, which is a great business card, but it reports to both government and consumer credit reporting agencies, meaning that using it will negatively impact your personal credit score. The best business credit cards report only to commercial credit bureaus such as Dun & Bradstreet, Equifax, and Experian.
Personal Guarantees on Business Credit Cards
Secrets to Building Business Credit is when selecting a credit card, it’s important to consider whether or not you are required to personally guarantee the credit card debt. In many cases, providing your social security number and undergoing a credit check to get approval for the credit card also involves giving a personal guarantee. This means that as the primary business owner, you are personally liable for the debt if the business is unable to pay off the credit card. This puts your personal assets, such as your bank account, home, vehicles, stocks, and bonds at risk. To minimize this risk, it is advisable to try and avoid personal guarantees and credit checks whenever possible.