At the beginning of your new business venture, it is logical to assume that applying for business credit cards will be a breeze. But as you sit down to sign the check, you may suddenly realize that there are some unexpected fees and high interest rates involved when you go to apply for your first card. Yes, from the moment you complete your initial business card application, everything is based on your credit history. However, when you apply for a small business credit card, an individual lender will very likely conduct a pre-card inquiry onto your personal credit as well. Every pre-card inquiry has the possibility to negatively affect your credit score, so be prepared for a minor drop in your score. So what is the answer to the question does business credit affect personal credit?
In short, the answer is no. Businesses and consumers do not share personal information when they exchange information electronically. Therefore, companies cannot use personal information to deny credit to you because of your lack of a good credit history. Similarly, lenders cannot use consumer credit information to deny you a card because you have bad business history.
It is important that you be aware of what your credit rating is before you start applying for business credit cards. If your FICO scores are low or if you have poor business history, you may find it difficult to secure loans. You may also find it difficult to get a job or obtain promotions at work since your chances of obtaining credit may be slim. Credit card issuers typically look at these factors before they approve your application for business credit cards.
But do not assume that the credit bureaus will report all of your business activities to them. Only a portion of your purchases are reported. Even then, you will only see your share of total purchases. Only the report that the credit card issuer reports to the three credit bureaus will show your activity.
Your personal credit score is important because this is the main factor used by lenders to determine whether or not you are worthy of a business line of credit. In addition to this, your business credit score will determine how fast you are approved for loans. Lenders are also concerned about how you manage your expenses. If you make a lot of business purchases with your personal credit cards and pay your bills on time, you can help your credit score. This shows your lenders that you are responsible.
If you find yourself having hard times securing business lines of credit, you may want to consider paying off some of your debts first. You may be able to save a significant amount of money this way. If you have many credit cards accounts, make sure you pay off all of them. If you currently have hard to manage debt problems, it is even harder to obtain a line of credit for business purposes. You may also want to consider seeking out government assistance in order to remove some of the burden from your shoulders.