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Are business credit cards personally guaranteed?

By:  Karl Talbot | 3rd December 2021

While a shiny business credit card can add credibility to your company, it can be difficult to determine who has ultimate responsibility for repaying the balance. So, are business credit cards personally guaranteed? Let’s take a look.

What is a personal guarantee?

A personal guarantee is a legally binding agreement made by an individual or business, outlining who is responsible for repaying business debt.

Such a guarantee is often required when signing up for a business credit card, as the card provider will want assurances that the card’s balance will be repaid, even if the business faces bankruptcy.

Does a personal guarantee affect your credit rating?

A personal guarantee isn’t specifically recorded on your credit file. However, it’s important to note that a business credit file is separate from your personal credit file.

When you apply for a business credit card, the issuer will want to determine the likelihood of your business being able to repay its debts, even if it requires a personal guarantee on application.

However, if you have a small business, typically defined as having less than three directors, then some lenders may merge your personal and business credit scores to help them make a decision. This is often done if a business has little or no previous credit history. Because of this, it’s vital for business owners to look after their personal credit score as well as their company’s score.

To protect your credit score when using a credit card, always ensure you repay what you owe on time, never miss a repayment and stay within your credit limit.

Are all business credit cards personally guaranteed?

While getting a business credit card without a personal guarantee is an attractive prospect – as you wouldn’t be liable for any debts – many providers won’t give you a card without one. This is likely to be the case if you own a small business.

Despite this, however, getting a business credit card without a personal guarantee isn’t unheard of. Both American Express and Barclaycard have been known to offer business credit cards without a personal guarantee, so check with the card provider before you apply.

How to choose the right business credit card with no personal guarantee

Here are four rules to follow in order to ensure you choose the right card for you.

1. Determine whether a business credit card is right for you

While a business credit card may seem like a good option, try to work out whether it’s the right type of credit card for you.

For example, if you need to borrow for a long period, then a personal 0% purchases credit card may be a better option. If you’d prefer to earn cashback on your business spending, then a normal cashback credit card may suffice.

If you’re unsure about whether you’ll be accepted for a personal credit card, you can use our Credit Card Eligibility Checker to determine your chances before applying.

2. Take a look at the full list of options

If you know you want a business credit card, then it’s important to do a full market comparison to find the card that best fits your needs. See our list of top-rated business credit cards to help you make a decision.

Once you’ve narrowed down the top cards, you can contact lenders individually to see whether they require you to sign a personal guarantee.

3. Be sure you qualify for the card

It’s easy to get distracted by the perks offered by business credit cards. But you need to ensure your business meets any qualifying criteria in order to be accepted.

For example, some card providers will require your business to be of a certain size or have a set annual turnover. So it’s an important aspect to check. If you don’t and apply anyway, you’ll almost certainly be rejected, which could harm your business credit score.

4. If in doubt, ask

Some card providers stipulate that a personal guarantee is required in order to be accepted. However, it may be possible to persuade a lender to give you a card without one simply by asking. Plus, if you and your company have decent credit scores, you’ll vastly improve your chances of success.

Check out our top-rated business credit cards in the UK to start comparing today.

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