Business credit can open or close doors to financial resources. Creditors use your payment history to assess whether you are a safe or risky borrower. Paying your business credit card late negatively impacts your business credit score. This may also have an impact on your personal credit score depending on how your business is structured.
Application
When you apply for a business credit card, you have the option of entering your Social Security number if your business does not have substantial credit history. New business owners are usually faced with this predicament because they are not able to verify their propensity to pay back bills without using personal credit information as a reference. If you apply using your Social Security number, your business card is attached to your personal credit score.
Impacts
Late payments negatively affect your credit score. If you make no tie between your personal credit and your business credit, your personal credit is unlikely to be affected by activities of your business. Ties can only be made during the application process. Certain business cards do not require any personal input from the business owner, but they do require the business to have assets and credit references. When you don't have credit references or assets, you must use your Social Security number to apply for your business credit card, and any late payment is reported on your personal credit report.
Business Types
Corporations protect the personal assets of directors and shareholders. Corporations are entities that can obtain credit, bring lawsuits and pay taxes. Corporations with assets and credit history can usually be approved for business credit cards without the need for a Social Security number.
Limited liability companies are not tax-paying entities and still require the personal information of the owner until the business is established. Sole proprietorships and general partnerships do not provide financial protection for business owners. When you are a sole proprietor or are joint owner in a partnership, your personal credit history is affected by business credit cards in your company's name.
Representation
Even if a corporation is liable for the debt of a business, a representative of the corporation must manage the notices that come from collections. That may mean that your personal assets cannot be taken to cover the debt of the business, but you are still involved in the process. Maintain documentation of all transactions related to billing on the credit card in case the corporation is sued for the balance on the card.
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