Business credit may appear on your personal credit report if the lender or creditor chooses to report that activity to the consumer credit bureaus.
Many small creditors require you, as the business owner, to personally guarantee their debt. This means you're personally liable to repay the full loan amount if your business fails to do so. Depending on your creditor’s policy, it might also mean that your business credit activity could run over onto your personal credit report. Some creditors report all activity, whether positive or negative, to your personal credit reports. Some may report activity only in cases of loan default or late payments.
Is It Better or Worse if Business Creditors Report Activity to Your Personal Profile?
Whether business credit reporting is helpful or harmful depends on your financial behavior and overall credit usage.
Cons of Business Credit on Your Personal Credit Profile
If you are purchasing big-ticket items with your business line of credit or racking up rewards by charging everything to your card, your personal credit may take a hit.
That’s because scoring systems like FICO and those used by Experian, Equifax, and TransUnion weigh your credit utilization ratio heavily. This percentage compares your reported credit balances against the credit limits still available — often using an individual loan or credit amount, as well as all your credit accounts totaled together.
If business credit balances show on your personal report, they may raise your utilization ratio and negatively affect your score.
When choosing a business credit card, you may want to avoid ones that do not report your activity to personal credit in certain circumstances.
For instance, sometimes you may have to run up charges that put you near the limit or carry a balance for multiple months. Circumstances that cause this could include buying inventory for your busy season, or airfare and travel expenses to attend a tradeshow. Running high balances like these may result in a lower personal credit score.
Pros of Business Credit on Your Personal Credit Profile
On the other hand, maintaining low balances and paying on time can make business credit reporting beneficial to your personal credit score. This is especially true if your credit profile is somewhat thin.
If your personal credit file is thin, using a business card that reports to personal bureaus can strengthen your overall profile.
How Business Credit Can Help My Personal Credit
Having lines of credit, loans, and business credit cards that do not report to your personal credit profile can help your business and personal credit ratings.
Just as negative reporting can harm your score, responsible business credit usage can enhance it when you:
- Pay off business charges alongside personal expenses each month to improve your utilization rate. This will improve your credit utilization ratio and add to your total available credit.
- Make your payments on time, which can lead to a healthy score. Decent payment history makes up to 35% of your FICO score.
- Decide you no longer want your business card being reported to your consumer profile, and you choose to leave it open. The length of your credit history makes up 15% of your score, and doing this will ensure the average age of your accounts remains as high as possible.
Business Credit that May Show Up on Personal Credit Reports
|
Bank / Card Issuer
|
Reports to Personal Credit (Positive/All Activity)?
|
Reports to Personal Credit (Negative/Default)?
|
|
American Express
|
No
|
Yes
|
|
Wells Fargo
|
No
|
No (but reserves the right)
|
|
Capital One
|
Yes (small business activity)
|
Yes (if not in good standing)
|
|
US Bank
|
No
|
No
|
|
PNC
|
No
|
No
|
|
Discover
|
Yes
|
Yes
|
|
CitiBusiness
|
No
|
No
|
|
Chase
|
No
|
Yes
|
|
Bank of America
|
No
|
No
|
Here are examples of card issuers and whether or not they report all credit activity, or only negative or default activity: Always check your business card provider’s terms and conditions to confirm current reporting practices.
