"You sign the paperwork, meaning if the business doesn't pay, you're liable. The card company checks your personal credit score, and missed payments or high amounts owed can negatively impact your credit report. For many business owners, that's not the best deal. However, there's an alternative with which more people are becoming familiar. Certain business credit cards run solely on your EIN - your employment identification number, a.k.a. your business tax ID - and do not involve personal credit whatsoever."
"The process of applying for a business credit card that only uses your EIN does not operate through your personal credit profile. Instead, the company assesses your business credit profile. They want to know how long you've been in business, if you've opened other business credit options, and whether you've paid on time in the past. The application process assesses the business as a separate entity."
Many business credit cards require a personal guarantee, making the cardholder personally liable and subjecting personal credit checks and potential credit report damage from missed payments. Some business cards instead use the business EIN exclusively, requiring no personal guarantee or personal credit check and keeping card activity off personal credit reports. EIN-only cards require an established business credit profile, proof of business formation, EIN, revenue or tax returns or bank statements, and a history of timely payments. Card issuers assume greater risk without a personal guarantee, so businesses typically need a stronger, longer-standing credit history to qualify.
Read at London Business News | Londonlovesbusiness.com
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