In many ways, applying for a business credit card is the same as doing so as an individual.
However, you don’t want to apply for a business credit card until you realize how your personal finances can be impacted.
Here are three important details to consider, all of which are often overlooked by business owners:
- Your personal credit history can be impacted by your business credit card. Remember this: your name and social security number may appear on the credit card application. For this reason, there’s a good chance that the inquiry and new account will become part of your personal credit history. In the end, it all comes down to how your card issuer reports your business credit card. Ask about this before making a final decision.
- You should never lie on a credit card application. This should go without saying, but some people believe it’s necessary to lie in order to secure a business credit card. Simply put, you should provide information that is 100 percent accurate, even if you think it will hinder your ability to be approved for the card. An example of this would be lying about your company’s income.
- You are personally liable for the debt. Is your name on the application? If so, you should never assume that your business (and your business alone) is responsible for the debt. When you offer a personal guarantee, you agree to pay back the money you borrow. Don’t assume that you can simply walk away from your business credit card debt if things take a turn for the worse. Doing so may have a negative impact on your credit score.
These are far from the only details to consider when applying for a business credit card. However, they are important to note as they are often overlooked by business owners when searching for offers and completing an application.
Are you a business owner? Do you have a credit card? Share your advice on the steps you took to secure your card, as well as what you do to manage it with success.
