A business credit card is a powerful tool for solving the business and personal financial needs. But a business credit card can affect your personal credit score. It totally depends on how you use it.
For small businessmen a business credit card can affect the personal credit score in Canada. It is because the card issuer will do a lot of enquiry on your usage and timely payments. Most of the banks and credit card issuers rely on the personal score before issuing business credit cards.
If the business credit card holders do late payments then it will definitely impact the personal score because the credit bureaus in Canada are always vigilant.
Role of Business credit card on Personal credit report
If your business credit card activities are present in your personal report then they are treated as normal credit card activities. It is what the FICO and other rating methods imply.
The main question here is how these business credit cards appear on your personal credit report that affects your credit score. If you have a credit card that reports to both the commercial as well as the credit bureaus then you keep these two things in mind.
Having a credit card that helps in both business and personal needs is very convenient. But one needs to ensure that the bills are timely paid and the limit is never exceeded. Otherwise it will impact both the personal and business credit score. It does not matter where you did the expenditure.
The second scenario is when you miss the payments and avail extra credit than specified in the limit. By having such a credit card you are just damaging your personal credit score. You have no clue, but such kinds of issues remain for around 10 years in the system.
Hence, the only way to prevent your personal credit score from falling is to use the business credit cards judiciously and never miss on timely payments.