This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Business credit cards and loans may help you meet both short- and long-term financial needs. Having credit in your business's name may affect your personal credit in two distinct ways.
- Applying for business credit may result in a hard inquiry on your personal credit report, which could deduct points from your credit score.
- Lenders and card issuers may report business loan or credit card account activity, such as missed payments, to consumer credit bureaus, which could also impact your personal credit scores.
If you plan to pursue financing for your business, here is more information about how it may affect your credit scores.
Understanding Business vs. Personal Credit
One difference between business and personal credit is what they measure. Business credit scores may demonstrate how you manage your company's financial obligations while personal credit could reflect how you navigate your personal finances.
Does My Business Credit Affect My Personal Credit?
Your business credit may affect your personal credit depending on several factors, including your business structure, credit use, and the lender or card issuer's reporting practices.
Your business credit score could help with managing cash flow by potentially helping you qualify for loans and lines of credit in some circumstances when you need funds to cover day-to-day expenses.
How Business Credit Can Impact Personal Credit
Business credit may affect personal credit scores in a few ways. First, applying for a business credit card or loan might require a check of your personal credit. Each new inquiry could affect your personal credit scores.
Business credit scores may demonstrate how you manage your company's financial obligations while personal credit could reflect how you navigate your personal finances.
You may see additional impacts if your card issuer or lender reports business credit account activity to the consumer credit bureaus. Whether the impacts are positive or negative depends on what's being reported. On-time payments and low credit usage could contribute to a positive business credit profile and may also help support personal credit scores. Late or missed payments, maxed-out credit lines, and defaults or delinquencies could hurt business and personal credit ratings.
Does My Personal Credit Affect My Business Credit?
Your personal credit scores may be one factor that lenders or card issuers consider when evaluating applications for business loans or credit cards. As you build business credit, personal credit may carry less weight in lending decisions.
What Is a Business Credit Score?
A business credit score is a number that reflects a business's creditworthiness. Business credit scores operate on a range, similar to personal credit scores. The range and list of factors used to calculate business credit scores vary by model.
When Business Cards Impact Personal Credit
You may see business credit impact personal credit if you miss payments on business credit cards or loans, have a high credit utilization, or co-sign a business debt for someone else. Here are some examples of how each one could affect you:
- Late/missed payments: Both business and personal credit scoring models place value on timely payments. If you miss a payment or pay late, your business credit card issuer may report that to the consumer credit bureaus.
- Credit utilization: Credit utilization refers to how much of your available credit limit you use at any given time. High utilization levels may affect your personal credit if your balance activity is reported to the credit bureaus.
- Co-signing: Co-signers are equally liable for debts, even if only one borrower assumes responsibility for making payments. If you co-sign a business loan or get a joint business credit card with a personal guarantee, failure to make payments (on your part or theirs) could harm your personal credit.
The Importance of Maintaining Strong Credit Scores
Building a credit history for your business may help support positive cash flow and overall financial health. A strong personal credit profile could help you establish a foundation for business credit.
Consider these tips to try to improve and maintain strong business and personal credit scores:
- Pay on time: Payment history is important to personal credit score calculations as well as business credit scoring models. Paying bills on time or early could contribute to a stronger credit profile.
- Monitor usage: Credit usage is another factor in credit scoring, as lenders may be able to see how dependent you are on your credit limits.
- Review credit history: Checking your business and personal credit profiles is an opportunity to learn which factors are helping or hurting your credit scores.
Managing Cards Without Harming Personal Credit
Business credit cards may offer a convenient way to cover day-to-day expenses, manage unexpected costs, or fund medium- to large-scale projects. Understanding the link between business and personal credit scores may help you make strategic decisions about how to use financing to help support your goals.
Learn more about how using a credit card may help your business grow.
Consider an American Express® Business Credit Card
With an American Express® Business Credit Card, you decide what’s best for your business - pay in full when it makes sense, or pay over time to help manage your cash flow1. Eligible purchases are automatically added to your Pay Over Time balance, up to your Pay Over Time Limit. You can choose to pay for those purchases over time with interest. Any purchase - or portion of a purchase - not added to your Pay Over Time balance must be paid in full each month.
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Terms and Conditions:
1. Eligible Charges: Eligible charges made by you or any Additional Card Member on your account can be paid over time. The following types of charges are ineligible for Pay Over Time: American Express® Travelers Cheques and other cash equivalents, certain insurance premiums, casino and other gambling transactions, any fees owed to American Express except foreign transaction fees, and other transactions designated by us. In addition, statement credits for eligible purchases, or any reversals of a statement credit, may be applied to either your Pay Over Time balance or Pay In Full balance regardless of where the eligible purchases originally posted. Any charge subject to a foreign transaction fee is not eligible to be moved to Pay Over Time on your Closing Date.
Pay Over Time Settings: Pay Over Time on your account is initially set to On. There are two settings, On and Off. When set to On, eligible charges will be automatically placed in your Pay Over Time balance, up to your Pay Over Time Limit. When set to Off, no new charges will be included in your Pay Over Time balance. You can change this setting by visiting your online account or calling the number on the back of your Card.
Interest on your Pay Over Time balance: For charges added automatically to a Pay Over Time balance, at the time they post to your account, we charge interest beginning on the date of each charge. For charges that we automatically move from your Pay in Full balance to your Pay Over Time balance on your Closing Date, we charge interest from the day after they are added to your Pay Over Time balance. We will not charge interest on charges automatically added to your Pay Over Time balance if you pay your account Total New Balance by the Payment Due Date each month. If at the time you turn on Pay Over Time, you’re already carrying a Pay Over Time balance from your last billing period, we will charge interest on new eligible charges added to a Pay Over Time balance from the transaction date. However, for charges that we move from your Pay In Full balance to your Pay Over Time balance on your Closing Date, we will charge interest from the day after they are added to your Pay Over Time balance. You must pay in full, by the Payment Due Date, any charge or portion of a charge that is not added to a Pay Over Time balance.
Pay Over Time Limit: We assign a Pay Over Time Limit to your Account. Your Pay Over Time Limit is the maximum amount you may carry as a balance. We may increase or decrease the amount of your Pay Over Time Limit and will tell you if we change that amount. Your Pay Over Time Limit may be different than the total amount you are allowed to spend on your Card. You must pay at least the Minimum Payment Due by the Payment Due Date each month to keep your account in good standing. The Minimum Payment Due includes all Pay in Full charges, any interest accrued on your account and a portion of your Pay Over Time balance.
No Preset Spending Limit: No Preset Spending Limit means your spending limit is flexible. Unlike a traditional Card with a set limit, the amount you can spend adjusts based on factors such as your purchase, payment, and credit history.
