Is My Business Spending Creeping Onto My Personal Credit Report?

Posted by Manfred P. MueckeJan 04, 20220 Comments

For many start-ups and small business owners, a business line of credit is a critical source of funds to meet monthly business cash flow needs. For many businesses, a business credit card serves as an important part of managing business expenses. As might be expected, most bank credit card issuers require an owner of a business to provide personal credit history and agree to a personal credit check as part of the application to obtaining a business credit card for a new small business. However, there is a critical difference to be found between an initial check of personal credit prior to issuance of a business credit card and ongoing reporting to a personal credit report.

Some Business Credit Usage Can Affect Personal Credit Reports

Yet, certain credit card issuers such as Capital One and Discover have reported business credit card usage to personal credit reporting agencies such as Experian and Transunion. This credit reporting practice conflates the spending and credit habits of the business with the personal credit usage of an individual despite a business credit card ostensibly used by the small business owner for business expenses. As a result, the use of certain business credit cards can create a distorted personal credit profile that is rendered inaccurate by the reporting of business card usage that has nothing to do with personal credit history. If you are applying for a mortgage or other form of personal credit, this can create an inaccurate and potentially misleading personal credit profile.

Federal And State Consumer Credit Reporting Law Require Accurate Credit Reporting

Certain consumer credit protection statutes such as the Federal Credit Reporting Act (FCRA) and the California Credit Reporting Agency Act (CCRAA) require furnishers of credit to report accurate use of credit to credit reporting agencies as well as certain steps for credit reporting agencies and credit furnishers to follow when investigating disputed credit reports. Potential remedies to affected consumers can include statutory and actual damages.

If your personal credit report may have been affected by your use of a small business credit card, please don't to reach out to Manfred, APC for a free, no-obligation evaluation and assessment of your potential claims.