The Dangers of Using Your Personal Credit Card for Business

Do you know that most people use their personal credit card to make business purchases? More than 65% of all small businesses use credit cards regularly but only 50% of those have those cards in the company name. In this post, we’ll look at the dangers that accompany using your personal credit cards for business purchases and how it can cost you in the long run.

3 Reasons to Stop Using Personal Credit Cards for Business Purchases

1. Affects Your Credit Utilization

When you use a personal credit card to make business purchases, it has a direct impact on your individual and overall credit utilization ration. Both ratios are part of the factors making up your FICO® scores.

Another important factor affecting your credit score is your debt. The credit score system is heavily influenced by your debt usage. The scoring model such as FICO® makes note of the credit limit on each card then compares it to the balance owing as reported by the card issue (credit limit vs. amount owing). So if you make business purchases on your personal credit card and incur business debts, it’ll directly influence your personal credit score.

You should get a business credit card instead of using your personal credit card which will protect your personal credit as none of your business debt or purchases will reflect on your personal credit reports.

2. Mixes Up Your Business and Personal Expenses

Mixing up your business and personal spending on your personal credit card is not only a bad idea, it is grounds for a bookkeeping disaster. Said act is known as commingling of funds and you should do everything in your power to avoid it. Commingling of funds exposes you to risk and jeopardizes the integrity of your business.

The most litigated issues in corporate law are the piercing of the corporate veil. When you use your personal credit card for personal and business purposes, you’re opening yourself up to the alter ego theory.

Instead of using your personal credit card for business purchases, you should instead get a business card that is for business purposes only. That way you establish an obvious difference between your business and personal purchases.

3. Affects Your Personal Credit

When you use your personal credit cards for business, you’re putting your personal credit record on the line. Your credit score, credit utilization ratios, creditability, and payment history are all affected.

Any debt that the business is carrying is automatically debt that you’re also carrying personally. Any unpaid credit card bill caused by a business purchase will also hurt your personal credit rating. The only way to prevent this is to get a business credit card that only reports to the business credit agencies.


As you’ve seen, there are several reasons why you need to stop using your personal credit card to cover business expenses. For details on how to get business credit cards that’ll send their report solely to the appropriate business credit agencies, visit