Many different types of accounts will contribute to your business credit history as long as they report to commercial credit bureaus. These may include:
- Accounts Payable
- Vendor business lines
- Business credit cards
- Business lines of credit
- Business loans
Similar to establishing personal credit, the most important part of establishing business credit is paying your bills on time. It’s also a good idea to limit the use of your credit. It is a measure of how much of your available credit you are using. Low usage means you’re on top of your balances and don’t take on too much debt.
Do business credit cards require a personal credit check?
Yes, small business credit cards absolutely require a personal credit check. Indeed, you will be required to personally guarantee the line of credit.
If your business cannot pay its credit card balance, you will still be personally responsible for paying the debt. Even if you close your business, you must pay the full balance on your business credit card. Failure to pay on a business card will hurt your personal credit in the same way as stopping paying on a personal credit card.
LEARN MORE: Do business credit cards affect my credit score?
Small Business Credit Cards vs. Corporate Credit Cards
There is one exception to the personal guarantee requirement: corporate credit cards. Corporate cards are in no way tied to your personal credit. They don’t require a personal credit check and they don’t have any personal guarantees.
While this sounds ideal, corporate cards have a few drawbacks:
- You need a specific business structure. Only LLCs and corporations are eligible for a corporate credit card. Sole proprietors and partnerships are generally not eligible.
- You need a lot of income. The majority of business credit cards require your business to have multi-million annual revenue. (An exception to this rule is the Brex card, but it must be paid daily.)
Business Cards for Homeowners with Good Personal Credit
Although a personal credit check for a business card can be inconvenient, there are benefits too. In particular, this means that you can get a business credit card without any business credit history.
In fact, even if your business is brand new, you can qualify for most business credit cards as long as your personal credit is in good shape. This includes many of the highest rated small business credit cards:
Most of the best business cards require good to excellent personal credit. On the FICO® score scale – the most commonly used measure – that means a score of 670 or higher (higher is better). Beyond a high score, your credit profile should show:
- No late payment
- Low credit card balances
- A long credit history
- A diversified credit mix
LEARN MORE: The Complete Guide to Understanding Your Credit Score
Can you get a business credit card with a low credit score?
If your personal credit rating is low, it can be difficult to get any type of credit card, especially business credit cards. However, you may still have a few options if you have bad credit:
- Corporate credit cards: As stated above, corporate credit cards are not associated with your personal credit at all. Only certain businesses may qualify for a business credit card.
- Secure Business Cards: A secured business credit card is a card that uses a cash deposit to secure the line of credit. This deposit usually sets your credit limit. If you pay on time each month and keep your balances low, you can increase your business credit over time.
- Secure Personal Cards: Secure consumer cards are the same as secure business cards. They use a cash deposit to secure the line of credit in the event of a payment default. Once you have accumulated credit, you may be automatically upgraded to an unsecured account. Secured card deposits are refundable as long as your account remains current.
LEARN MORE: What is a secured credit card?
Are business credit cards covered by the consumer credit bureaus?
Some credit card issuers report business card data to the consumer credit bureaus, but most do not. Companies reported to report regularly commercial offices and consumer offices include:
It is said that Barclays sometimes pays off, but not always. The main card issuers that would have does not report consumer desk business card usage data includes:
Keep in mind that this only applies to your regular usage, such as your payment history and monthly balances. If you become overdue on your business card account – that is, you are more than 60 days overdue – most issuers will report the overdue account to consumer bureaus.
RELATED: Check out The Ascent’s guide to the best banks for small business.