I’m planning to get a business credit card for my startup. Will it be reported to credit bureaus and impact my personal credit score?
In India, the majority of the business credit cards are all issued in the personal credit profile of the owner of the business with emphasis on sole proprietorship or freelancing or startup business. This implies that the practice and payment pattern of the business credit card may also be traced to credit bureaus like the CIBIL, Experian, Equifax, or CRIF High mark- which may even have an impact on your individual credit score.
There is also personal guarantee often demanded by banks who accept the business of individual or partnership type. When such is the case:
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It will positively impact as orders will be paid on time in order to increase your credit rating.
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Your own personal credit record can suffer in case of late payments, defaults, or excessive use of over-limit financial practices.
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Even business level charges on the business card could bring down your score in case the credit utilization happens at higher levels.
In the cases of such bigger entities as a private limited company or LLP, business credit cards can be attached to the credit profile of the company when such a card is taken in the name of the business and has specific financial requirements. In that, the reporting can be limited to business credit file.
Key Points:
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Business credit cards usually come under personal PAN of the applicant.
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Your personal credit is also threatened in case you default, even with a business card.