When applying for a business credit card, you’re required to sign the Agreement form which includes all the terms and conditions of your credit card issuer. Part of these conditions is the Personal Liability Agreement where the business credit card holder agrees to be the one responsible for the payments of all future debts that would be charged to the card.

1. Personal Liability on Business Credit Cards
When applying for a business credit card, you’re required to sign the Agreement form which includes all
the terms and conditions of your credit card issuer. Part of these conditions is the Personal Liability
Agreement where the business credit card holder agrees to be the one responsible for the payments of
all future debts that would be charged to the card.
If you’re an entrepreneur with a business credit card, are you really aware of this condition? Do you
fully understand your obligations as the card holder? In order to be clear on this issue, let’s talk about
how personal liability applies to business credit cards.
Personal Liability and Small Business Credit Cards
If you’ve just started your business and you have not yet established your business’s credit history, your
potential lender or your credit card company would take your personal credit report into consideration.
If your personal credit history qualifies with the credit card’s requirements, chances are your application
would be approved. Nevertheless, you’ll be subjected to the personal liability statement on your
contract.
What does personal liability mean? Since your personal credit report was used as the basis of your
approval, how you use your business credit card will also directly affect your personal credit history.
Even if your business and personal credit card expenses belong to two separate accounts, both will still
be reflected on your personal credit report.
This means if you are frequently late in submitting your payments to your business credit card, your own
credit score can be badly affected. Remember that late payments can pull down your credit score
whether you used your business credit card or your personal credit card. If you exceeded your
business’s credit limit, your credit score will also suffer. Therefore, you need to be constantly aware of
your payment obligations both to your business and personal your credit cards.
Can You Relieve Yourself of Liability?
Is it possible to get away from your business credit card’s personal liability clause? Yes. Remember, that
this agreement was executed because you did not have a business credit report. Nevertheless, as soon
as you get approved for a business credit card, it is wise to also sign up your company with a business
credit reporting agency such as Dun & Bradstreet or Experian.
By establishing a separate credit history for your business, you can soon be set free from the personal
liability connected to your business credit card. Why is this important? Take note that some consumer
rights that are applicable to personal credit cardholders may not apply to owners of business credit
cards.
For example, the right to complain about damages with the products you received or the right to
dispute unauthorized charges on your account does not necessarily apply to business credit cardholders.
Thus, wrong charges on your business credit card account can instantly affect your personal credit. By

2. separating your personal and business’s credit report, you can protect your personal credit and free
yourself from possible liabilities.
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