Do I Need a Business Credit Score to Get a Business Credit Card?

Like people, businesses can have their own credit reports and credit scores. And just like an individual, a business can need a credit score to borrow money, and even open some types of credit accounts. So it can make sense to believe that a small business might need its own credit history to land the right business credit card. And when are considering applying for a small business credit card, you might start to wonder if you need a business credit score to get that card.

Why your small business doesn’t need a business credit score to get a credit card

The vast majority of business credit cards are for small businesses. Often, these products are very similar to personal credit cards. However, when you apply for one of these cards, you are using your personal credit history and credit score. In addition, you will be personally obligated to repay your debts, just as you would with your personal credit cards. Furthermore, you will also be responsible for all of the charges made by your employee cardholders.

Yet not all business credit cards are designed for small businesses. Corporate credit cards are a completely separate product from small business credit cards. Unlike small business credit cards, your company will need its own credit report and credit score to apply for a corporate card.

Corporate cards are designed for the needs of medium and large-sized companies, non-profits, and government organizations. Clearly, a large company would be unable to make purchases using the credit of one of its owners. And if the organization is publicly owned, or a government entity, it wouldn’t have individual owners anyway. Corporate credit cards are only offered by some of the largest banks. You won’t find corporate credit card applications in the same places that you might see applications for personal and small business credit cards.

The advantages of small business credit cards

Applying for a small business card is much easier than a corporate card, as you are relying on your personal credit score and credit history. In addition, there are many kinds of small business credit cards. Some offer cash back rewards, while other offer travel rewards in the form of point and miles.

In fact, the market for small business credit cards is quite large, ranging from cards with no annual fee to premium cards that offer high-end perks and benefits. And when you have your employees as authorized users on a small business card, you will earn rewards on any charges that they make.

A small business credit card is also an excellent tool for managing your business expenses. Not only will these expenses be separate from your personal charges, but most small business credit cards come with tools to help track your expenses. These tools, including mobile apps, can add notations to your charges, and offer you quarterly and annual summaries of your business expenses.

Applying for a small business credit card

When you apply for a small business credit card, you’ll be using your personal information, as well as the information from your company. The application will ask for an Employer Identification Number (EIN), but you can typically use your Social Security number if your business doesn’t have one. Other common questions will include the age of the business, your industry, and it’s legal structure (corporation, partnership, etc). Most card issuers will also want an idea of your business’s annual revenue and monthly spending. Finally, you’ll also need to supply all of your personal information, just like you would when applying for any other credit card.

Bottom line

It’s nearly as easy to apply for a small business credit card as it is for any other card. By choosing the right business credit card for your needs, you can utilize this valuable tool without waiting until your company has its own credit score.

 

About the Author — Jason Steele is an expert in the credit card industry. He is frequently quoted in national media and his work is regularly featured my mainstream outlets such as Yahoo! Finance, MSN Money, and Business Insider.