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If in case you have an employer identification quantity (EIN) – a nine-digit tax ID quantity assigned to what you are promoting by the IRS – you need to use it to use for a small-business bank card. However you’ll nearly all the time should additionally present a Social Safety quantity.
That's as a result of most small-business playing cards require candidates to personally assure the debt on the cardboard. In different phrases, you might be nonetheless chargeable for paying again any debt, even when what you are promoting goes below.
In consequence, while you apply for a small-business card with an EIN, the issuer will sometimes use your Social Safety quantity to test your private credit score. Many small-business playing cards require good to glorious private credit score (sometimes FICO scores of no less than 690) for approval.
»MORE: How you can apply for an EIN
Protecting enterprise separate
Regardless of the private assure, the exercise in your small-business bank card received't essentially seem in your private credit score report.
When you want to maintain what you are promoting and private accounts separate, then you’ll be able to search for a card that studies solely to industrial credit score bureaus and never the patron credit score bureaus. Or you’ll be able to search for one which doesn't report funds in any respect.
Financial institution of America®, Citi and Wells Fargo don’t report the exercise from their small-business playing cards to the patron credit score bureaus. BBVA, which affords the BBVA Visa® Enterprise Rewards Credit score Card, doesn't report small-business card exercise to any of the credit score bureaus, client or industrial.
If the cardboard does report back to the patron credit score bureaus, as within the case of Capital One and Uncover small-business playing cards, then the impact may be constructive or adverse: When you make your funds on time and have a low credit score utilization ratio (ideally lower than 30%), then the account may enhance your credit score scores. However in case you miss funds and accrue substantial debt, it may drag down your scores.
»MORE: How to decide on a enterprise bank card
Your private legal responsibility
No matter whether or not your small-business card studies to the credit score bureaus, the private assure nonetheless applies: Even when your small enterprise goes out of enterprise, you’ll nonetheless be chargeable for paying off the cardboard.
Card issuers typically spell out these guidelines within the phrases and circumstances that include the cardboard. Earlier than signing up for a card, you’ll be able to learn by means of the phrases and circumstances and search for phrases like “personally accountable” and “liable” to see simply what you're signing up for.
The Capital One® Spark® Money for Enterprise card, for instance, says within the phrases and circumstances that the cardholder agrees “to be individually, collectively and severally accountable for all costs.”
»MORE: 6 main variations between enterprise and private bank cards
Exceptions to the rule
There are some bank card issuers that require an EIN to use however not a Social Safety quantity. The Brex Card for Startups, for instance, is a company card for startups that doesn't require an SSN or a private assure. As an alternative, it evaluates creditworthiness based mostly on issues like the corporate's money stream and spending patterns. It additionally requires a financial institution stability of $ 100,000 to qualify.
Generally, although, company playing cards – the place the corporate is on the hook for the debt and never the person cardholder – can be found for companies with established credit score histories, not for brand new companies or very small companies.
When you simply opened up store or are operating a one- or two-person enterprise, it will likely be tough to discover a small-business bank card that doesn't require your Social Safety quantity alongside along with your EIN.