The right business credit card offers a lot of benefits to a small-business owner. Not only does a business credit card help you earn valuable points and miles, but it also may help you establish a better commercial credit rating for your company.
But will a business credit card help build your personal credit scores? Unfortunately, there is no simple answer to that question. Although your account management is the most important factor in getting or keeping a good credit score, there are a few ways that a business credit card might help improve your personal credit score.
Related: How to build credit
Establish personal credit
Credit cards, business or personal, help you establish or boost your credit rating. Most personal credit cards report account activity monthly to the three major consumer credit reporting agencies — Equifax, TransUnion and Experian.
Business credit cards work a little differently. Most issuers report your account information each month to one or more of the business credit bureaus. These card issuers give you the opportunity to build positive commercial credit when you open an account. Though not necessarily the norm, some issuers of business credit cards also report your account activity to the consumer credit bureaus each month. When you’re smart about how you manage these accounts, business credit cards potentially help you build business and personal credit simultaneously.
Want to know which card issuers report to the consumer credit bureaus, the business credit bureaus, or both? Ask the card issuer about its credit reporting policy or check this guide for help.
Lower personal credit utilization
Here’s where the magic happens, from a personal credit score perspective. Using a business credit card that doesn’t appear on your consumer credit reports might lower your personal credit utilization ratio. This sometimes makes a