Problems with Small Business Credit Cards

by Ed Martin

Aleksandra Todorova has an interesting article at Entrepreneur.com talking about an unforeseen risk you face when you have a small business credit card.

You’ve probably seen the offers for small business credit cards. They often have attractive rates and terms, and have been a useful way for cash-strapped small businesses to  manage cash flow. But now they come with a big gotcha. The card issuer can list the small business debts on your personal credit report. This can have a nasty effect on your personal credit score and your ability to get personal loans and lines of credit because now all of a sudden you are carrying a whole lot more debt.

In the past the business credit card debts were kept separate and not considered with your personal debt as long as they were in good standing. That practice seems to be changing. Ouch!

Todorova reports that Capital One is the first big card issuer to start reporting the business credit card debts that are in good standing to consumer credit report bureaus. Others may well follow. The issuers do report delinquent business card debts now.

All this means that you have to be more careful when signing up for these small business credit cards and watch how you use them. Any mess-ups there can have put a big hit on your business and on your personal pocketbook.

For more on this topic, check out Small-Business Cards Now Carry Sizable Risk.

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