Business credit cards explained

Personal guarantee vs true business credit

Business cards come in two flavors, and most people don't know which one they have. The difference determines whether business debt hits your personal credit report and whether your personal assets are at risk.

Using the wrong type can destroy your personal score even when you run the business perfectly.

What to look for and which to prioritize.

Key points

• Most business cards require a personal guarantee. You sign personally for the debt. Missed payments hit personal credit. Default puts personal assets at risk.
• True business cards use only business credit. Typically require 2+ years, PAYDEX 80+, solid revenue. No personal guarantee.
• Personal guarantee cards still build business credit. Chase Ink, Amex Business, Capital One Spark report to business bureaus even with the PG.
• Watch for "split reporting." Some cards report only to personal (bad), only to business (best), or both. Pick ones that report to business credit.