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Quick background: I have no intention whatsoever on actually getting any loan. However, to accept online credit card payments (eg. via Paypal Payments Pro), merchant account providers determine eligibility via credit check – which I'm currently failing at (not having used a credit card in my whole life, and all.)

To work around this, I'm thinking of getting a credit card for my newly registered business, and start building credit history, repaying the card at full at the end of each month. I'm the single owner of the company.

Questions:

  • Does my personal credit score affects the company's credit evaluation?
  • Is there any way to get a company's current credit score, similar to my personal one?
  • Any ideas how long it could take for a newly formed company to get in "good" credit rating via the method described above?

Many thanks in advance.

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For a newly registered business, you'll be using your "personal" credit score to get the credit. You will need to sign for the credit card personally so that if your business goes under, they still get paid.

Your idea of opening a business card to increase your credit score is not a sound one.

Business plastic might not show up on your personal credit history. While some issuers report business accounts on a consumer's personal credit history, others don't.

This cuts both ways. Some entrepreneurs want business cards on their personal reports, believing those nice high limits and good payment histories will boost their scores. Other small business owners, especially those who keep high running balances, know that including that credit line could potentially lower their personal credit scores even if they pay off the cards in full every month.

There is one instance in which the card will show up on your personal credit history: if you go into default. You're not entitled to a positive mark, "but if you get a negative mark, it will go on your personal report," Frank says.

And some further information related to evaluating a business for a credit card:

If an issuer is evaluating you for a business card, the company should be asking about your business, says Frank. In addition, there "should be something on the application that indicates it's for business use," he says. Bottom line: If it's a business card, expect that the issuer will want at least some information pertaining to your business.

There is additional underwriting for small business cards, says Alfonso. In addition to personal salary and credit scores, business owners "can share financials with us, and we evaluate the entire business financial background in order to give them larger lines," she says.

Anticipate that the issuer will check your personal credit, too. "The vast majority of business cards are based on a personal credit score," says Frank. In addition, many issuers ask entrepreneurs to personally guarantee the accounts. That means even if the businesses go bust, the owners promise to repay the debts.

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