Do business credit cards build credit?

Using your business credit card responsibly can help you to build your business credit score – and potentially your personal credit score too. By the same token, if you fall behind with your credit card payments, or you pay less than the monthly minimum amount, then your business and personal credit scores could be affected.

5 min read
Woman holding her credit card and checking her phone at a desk

Do business credit cards check personal credit? 

If you run a small business or a startup with a thin business credit history, then the lender will conduct a search on your business credit report when you apply for a business credit card. They are also likely to carry out a personal credit check on the primary cardholder. (Any additional cardholders won’t require a credit check and they won’t be liable to pay the balance).

If the lender can see from your credit report that you are a responsible borrower, then they may be more willing to lend you money to your business at competitive rates. Your past financial behaviour may reassure them that they’re not taking too much of a risk. If, on the other hand, you have bad credit, you may your borrowing options are reduced.

Each business credit card provider follows their own guidelines when it comes to handling your business credit card usage and your personal credit score. So, it’s best to check with the lender before you sign up. 

If the lender asks you to sign a personal guarantee to take out the card, this is a clear indication that they will check your credit history. A personal guarantee involves signing a legal agreement confirming that you will repay the credit card if your business can no longer do so. In this way, it acts as a safety net for the lender.

How does a business credit card affect my personal credit score? 

If you are the primary account holder on a business credit card and you have signed a personal guarantee, the way you manage the card will affect your personal credit score as well as your business credit score.  Your personal credit score could go up if you pay on time, every time. Or it could go down if you miss payments, pay less than the minimum monthly amount or rack up a large amount of debt.

Bear in mind, if your credit score is impacted, it could reduce your ability to get credit in the future. So, it’s best to only apply for a business credit card if you are confident that you’re going to be able to afford the repayments.

Assuming you have signed a personal guarantee, we look at the ways a business credit card can build or impact your personal and business credit scores.

Ways a business credit card can help build your credit score 

  • paying on time, every time – your business and personal credit score will increase, and you will show the lender that you can manage credit responsibly
  • managing charges carefully – being aware of who is spending what on your card can help you to avoid racking up debt, especially if you have several employees registered as additional cardholders
  • keeping your credit utilisation ratio at 30% or less this means spending no more than 30% of your available credit limit across all of your credit cards and overdrafts combined

Ways a business credit card can impact your credit score 

  • applying for a business card will involve a hard check – this will appear on both your business and personal credit report and can cause a temporary dip in your credit score
  • making large business purchases – if you spend over 30% of your credit limit, your credit score could decrease
  • defaulting on your debt – missing payments and defaulting on your debt can significantly damage your credit score and impact your ability to take out credit in the future. You may also incur late fines

Can I get a business credit card that won’t affect my personal credit? 

It is possible to get a business credit card that won’t affect your personal credit, but these are usually difficult to find, and you may need a large business to qualify.

All lenders have different requirements, but most report your business credit card activities to the major credit bureaus that deal with your personal credit report (TransUnion, Experian and Equifax).

Just bear in mind that as the primary account holder, you will still be liable for repaying the balance on your business credit card - even if you get a card that doesn’t affect your personal credit score. Plus, not making your contractual payments will affect your business credit score, which can affect your ability to get finance for your company in the future.

Business credit card vs personal  

You may be wondering what the difference is between a personal credit card and a business credit card. Here are seven major differences between the two:

  1. business credit cards are designed especially for business purchases, which can help to keep your personal and business expenses separate
  2. with a small business credit card, most lenders will assess your business credit score as well as your personal credit score
  3. you can usually set a higher credit limit on a business credit card
  4. business credit cards may come with higher interest rates and annual fees
  5. you can use a business credit card to build business credit, which means you may be eligible for more credit further down the line
  6. there are different features designed for business credit cards, such as customisable spending limits, business rewards, expense tracking features and the ability to add employees as cardholders
  7. business credit cards aren’t covered by Section 75, which means you may find it harder to get your money back if you are mis-sold or receive a fault item, for example

Disclaimer: All information and links are correct at the time of publishing.

Fiona Peake, Personal Finance Writer

Fiona Peake

Personal Finance Writer

Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.