How does business credit card impact score?

[Anonymous]

I have just opened a small business (working out of my home), and even though I have opted out of getting pre-approved offers (via optoutprescreen.com), I have just received a couple of offers to open a business platinum card.  The most recent is from Capital One Small Business Solutions, with the following:

• Visa Business Platinum card
• No Hassle Miles
• 0% apr on bal transfers until Aug 2008
• no annual fee
• 1 mile per $1 spent on new purchases
• 14.24% apr on all other purchases

Ok - the offer sounds good.  But my issue is that we are in preparation to buy our first home and I have been very cautious about opening any new cards - have not opened anything since last October.  Will a credit card in the name of my business impact my credit (and show on my reports) in the same way as me opening a personal card?  Or does credit get established in my business name?  The offer was addressed to my business name, attention my name (it's a sole proprietorship).  Any business owners out there?

[Anonymous]

Tuscani or Noah or NWM are you out there?  Help?

Message Edited by focused07 on 07-09-2007 08:49 PM

[ah32]

They will pull your personal credit to make sure you are handling it well.  If you are approved, the card should be reported on your business report.  It's called a Dunn & Bradstreet report.  It will not be reported on your personal credit report.  The problem is that not all companies report to Dunn & Bradstreet.  It costs them money.  I would call and ask Capital One if they report.  I've had friends own a Amex bus card for years and then they apply for other cards to be turned down for lack of business credit.  Out of curiousity, do you bank with Wells Fargo? You can be pre-approved for business credit with them.  It's easy if you have a good personal credit history.  When you open a business acct with WF, they automatically pull your credit.  If you have been in business (even if it's out of your house) for at least two years, you can get a pre-approval for a bus line.  Bus cards require less history in business.  It's very easy for some, just depends on credit, annual GROSS sales and household income.  You can ask for a line increase/rate decrease every 6 months.  If you have any plans to expand, buy a building for your business, etc. then start building your business credit now before you need it! Follow the same guidelines as a personal credit card.  Hope this helps!

[Anonymous]

Thanks for the info -  I learned something new.  There is actually separate business credit.  So no hopes that the business credit line could help impact my personal score by reducing overall utl?

Oh - and yes I do bank with Wells Fargo - have been with them for approx. 12 years.  I was planning on opening a business checking acct. with them  - and I did ask the question about the inquiry - will have to take the hit on the ahrd pull in order to open the account.  So are you saying that a business line of credit is typically approved when a new business checking is opened?  Even if the business is relatively new?

Message Edited by focused07 on 07-09-2007 09:07 PM

[ah32]

Doubtful, but if you can get approved and move your business debt OFF your personal credit cards, lines, etc. that will help your personal credit scores reducing your personal debt.  Is that what you're asking? Utl? Still not adebt at abbreviations.

[Anonymous]

Yes - that was my plan - to take advantage of a possibly high limit card (the capital one is offering a limit of up to 20K), do balance transfers off of my personal cards, thus reducing my overall utilization, and increasing my score.

[ah32]

That should work because it will help bring down your utilization on personal credit.  They will pull your personal credit.  What are you fico scores?

[Anonymous]

685 TU

670 EQ

660 EX

[ah32]

Apparently, Equifax also has a business credit agency.  Scary! They are horrible to deal with on the consumer side because I have to work with CSC.  Most often WF pulls experian consumer reports and either Equifax business or Dunn & Bradstreet.  You should have no problems, unless your consumer accts have a lot of lates or derog info.  Dunn & Bradstreet costs around $300 to register.  Once you register, banks are able to report to them.  Unfortunately, they cannot report to them unless you register.  Sometimes a business does not need to register if they have a good personal report and/or relationship with the bank.  It's easiest to get approved for a credit card.

[Anonymous]

I found this today on smartmoney.com

Updated on July 7, 2007.

WHEN TRYING TO get a small business off the ground, it's not essential to have a credit card. But it sure helps.

Packing some plastic can help alleviate cash-flow crunches. And while it's not the best source of capital, a credit card can obviously come in handy when a purchase is necessary and cash is tight. Many cards also come with handy software, making it easy to track expenses and keep records for tax purposes.

But there are drawbacks to small-business credit-card usage as well. And knowing them beforehand could save you a lot of heartache. Perhaps the biggest: Your personal and professional finances are blended, at least for the first few years. A business credit card carries the same personal liability as a personal card. So if the business defaults on credit-card payments, a creditor can come after the person who signed the card for payment. Most lenders require borrowers to agree to this provision on the card application.

Moreover, your small-business credit card will be noted on your personal credit reports. (Meaning those provided by Experian, Transunion and Equifax.) A few late payments could seriously damage your personal credit score, while a big debt run-up by the business could make you look more overextended than you really are, regardless of the payment history, explains Gerri Detweiler, author of "The Ultimate Credit Handbook."

The good news is, the personal-liability agreement isn't always set in stone. After a few years of regular payments, a lender might be willing to remove the personal-liability component, says Jeffrey Langer, an attorney with Dreher Langer & Tomkies, who specializes in consumer financial services and banking law. But "it would inevitably have to be negotiated on a case-by-case basis." And no matter what, once your business has established its own credit history, you should be able to remove your small-business credit card from your personal credit reports.

One other word of caution: Because business credit cards are meant to be used by companies, not consumers, they come with fewer consumer protections than a personal credit card. For example, with consumer cards you can dispute billing errors on the account within certain time limits, and during that time the credit-card company cannot list that disputed amount as delinquent, or cancel the card. Not so with business credit cards.

The same goes for asserting "claims and defenses" when you order merchandise and receive it in poor condition. With a personal credit card, you can dispute the charges, and if the vendor won't cooperate, the credit-card company will step in on your behalf. With a business card, the credit-card company won't get involved with the dispute.

So is it even worth it to carry a small-business card rather than a personal card? You bet. Once your business has established a solid track record of its own, you can take steps to separate that account from your personal finances — which is obviously a good thing. But you need to wield the card wisely.