Does a business credit card affect your personal credit score?

Sven von Sperl
September 8, 2021

Many business owners will find themselves needing to apply for a business credit card in order to keep their business running or to prepare for periods of high expenditure. But before they do so they want to know whether or not a business credit card will affect their personal credit score.

The short answer to this question is it’s unlikely to have a significant impact. The longer answer is, your business credit card will probably have a negligible impact on your personal credit score so long as you engage with business credit products properly.

Hard checks, soft checks, and your personal credit score

Taking an unsecured business loan is far more likely to impact your personal credit score than using a business credit card. But what matters most is that you limit the number of hard credit checks taken out on your credit file and make sure to meet all your repayments in full.

Hard credit checks are considered the proper check that a lender takes on your credit file before deciding to loan you money or issue a business credit card. These are checks that are registered with the credit bureau and will show up on your personal credit file when other checks are done, regardless of whether they’re hard or soft. It essentially means that you’re being looked at seriously for creditworthiness.

During the application process you may end up having a soft check carried out, this has zero impact on your personal credit score. A soft check is, at most, considered a request to view your credit file. There are many legitimate reasons for this to be carried out and it will not move your credit score in any direction. These soft checks tend to show surface-level information about your creditworthiness such as whether or not you have defaulted on loans in the past.

A hard check delves deeper into your credit history such as loans you have currently taken out and if lenders have refused you money in the past.

If you pass the hard check and the other criteria [link to How do you get a business credit card] required for a business credit card then you’ll receive your card. Now you get to spend however you need to keep your business operations flowing. So long as you’re meeting the terms of the agreement with regards to repayment then everything is good and you’ll be able to gradually increase your business’s credit score. As for your personal credit score, the only thing you need to do is keep your hard checks to a minimum.

This means that you should not apply for every business loan and business credit card product in the country. Every time you complete an application the lender will run a hard check on your personal credit file and with every hard check, your personal credit score suffers.

If you only apply for a business credit card one at a time and stick to having only one business credit card provider then your personal credit score will be largely untouched. And you can focus on the work of your business and increasing its credit score rather than worrying about your personal credit.

Sven von Sperl
September 8, 2021