This question of whether business credit cards which are personally guaranteed should appear on your credit report recently came up on our discussion boards. I myself have two business credit cards and each one is linked to my IRS-issued Employer Identification Number (EIN). However, each card also required me to give my personal Social Security Number.
The good news: neither credit card account appears on my credit report. What is the reason for this? It’s really difficult to find any documentation or reason anywhere on the internet, not even on the credit bureaus’ websites. Now I’m not complaining (really), as I don’t need the perfect paying history on these accounts to bolster my credit score (for the moment).
If you own your own business and have applied for credit – personally guaranteeing credit is pretty normal. It’s hard to find a bank which will issue you business credit without it.
The Fair Credit Reporting Act (FCRA) does not specifically prohibit the inclusion of personally guaranteed business loans on your personal credit report. Section 605 of the FCRA spells out exactly what can be included, and business credit is not mentioned in any way.
Business credit databases are completely separate from the “Big 3″ bureaus housing personal credit, the biggest of them being Dunn & Bradstreet. (However, Experian and Equifax also offer commercial credit reports.) There are specialty credit bureaus PayNet Online (leasing and other commercial credit), Lumbermen’s (building supply industry), or Seafax (perishable food industry), to name a few. These business credit bureaus do not consider the personal credit of the business owners.
I can guarantee that your personally-guaranteed business credit cards WILL find their way to your credit reports if you default on them. They will, at the minimum, be sent to collections, and the collection agency most likely will report it, as this is one of their most effective collection tactics. We covered how business loans can affect your credit in a previous post.
You may be surprised to learn that good number of business credit cards don’t report to any credit bureaus at all, business or otherwise. Of the 500 or so business credit cards available in the marketplace, less than 70 report your payment history to the business credit bureaus.
So is the reason that personally guaranteed business credit is not reported to your credit report due to the fact that business credit cards and loan companies choose not to do this or it is because they can’t. Experian or Equifax has a pre-set online dispute option as “business account” as a reason to remove, but I’d like to know if there are actual laws vs. credit bureau policy. For once, this reporter is stumped.
Can you help me find some actual credit law which dictates this? Some uniform business policy? FTC opinion letters? Leave a comment!
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For years I have had business credit cards that I have personally guaranteed. However, as of yesterday all of them began showing up on my credit report as “Business Loan Personally Guaranteed” – Is there a new law that passed or something that I don’t know about? I can’t find any documentation online. None of them are late or anything like that.