Should I Open A Small Business Credit Card?

A business credit card is not the same as a personal credit card. It’s designed for business purposes, to separate and track your expenses.  Since a business credit card is used for business purposes, it is not usually reported on your consumer credit report at Equifax, Experian or TransUnion, although there are some exceptions.  Another exception can be delinquent accounts that have been personally guaranteed.

Business credit reports are not the same as consumer credit reports.  Information is reported on the business such as your business credit cards, payments to businesses and financial information on the business. The three major companies that compile business reports are Dunn & Bradstreet, Equifax and Experian.

Your consumer credit report (personal credit) is also very important to your business’s ability to get credit. When you apply for business credit, it is not unusual for both your personal and business credit reports will be reviewed. Anyone else in the business that will be using the card will have their personal credit reviewed as well.

Similarities to personal credit cards

  • Credit limits
  • Minimum monthly payments
  • Interest and annual fees

Differences from personal credit cards

  • May not be reported to consumer credit reporting agencies, but defaults will be reported
  • No caps on late fees or over-limit fees
  • Interest rates can change at any time
  • Payments not due at same time each month
  • Higher credit limits
  • More rewards related to business and travel
  • Payments don’t have to be applied to the highest interest rate purchases first

Whether it is a business or personal credit card, you should pay in full, on time and stay out of debt. It is best to separate business and personal expenses. Since the laws are different for business versus personal credit card, you should be careful to read the fine print and be aware of the terms.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

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