defaulting on sole proprietor card

[theGman]

Hello creditboarders, good news is that I paid off personal lines of credit except a couple of Citi lines that are at zero percent.

 

I have a few business lines left to pay. Now these are linked to my social security number so I am posting in the personal forum.

 

What happens if I default/settle on these? Does it affect scores or stay off the reports?

 

Thank you!

 

 

Sent from my iPhone using Tapatalk

[cv91915]

As I understand, business credit cards are a mixed bag.

 

Some report to personal, some never do(?), and some do only if you default.

 

If the TLs are already on your personal credit, I'd expect those to be updated.

 

You may have to list the names of the issuers to get specific feedback, but wait for someone who's more informed to weigh in and confirm.

[hdporter]

Caveat:  Pure <informed> speculation here ...

 

If a business credit card or line doesn't report on your credit report prior to default, I wouldn't expect that to change.  The primary account relationship is with your business, not you.  The same guidelines that determine how an account reports positive tradeline history should bear on the reporting of adverse experience.

 

However, the creditor's attempts to enforce your personal guarantee through collections and/or judgment are an entirely different matter.  You're the primary party to these transactions, not your business.  Most certainly these are reportable and I would expect them to be reported.

 

In just googling this topic, it anecdotally appears that the default of a business credit card line is the key event upon which a bank would look to pursue a personal guarantee, and that upon default you should expect a reasonable likelihood that the debt would show up on your personal credit report.

 

The key to salvaging a business account without impairment to your personal credit score may hinge on your success in negotiating debt settlement in advance of a default.  I wouldn't be surprised if chances of this are slim.  The issuer knows that their options for recourse increase once they invoke the personal guarantee, so they may be only be willing to settle in exchange for something well north of 60% of the balance due.

Edited July 13, 2021 by hdporter

[cv91915]

Here is a matrix from NerdWallet that summarizes their interpretation.  
 

Corroborate this with another source or two before making decisions.

 

https://www.nerdwallet.com/article/credit-cards/do-business-credit-cards-affect-personal-credit-score 

 

 

Edited July 13, 2021 by cv91915

[theGman]

thank you @cv91915 and @hdporter

 

settling, if it works, will adversely affect business scores. for how long? is this similar to personal lines. my business scores are currently A+

Edited July 14, 2021 by theGman

[cv91915]

6 hours ago, theGman said:

thank you @cv91915 and @hdporter

 

settling, if it works, will adversely affect business scores. for how long? is this similar to personal lines. my business scores are currently A+

 

Sorry, as you can tell from my SOS to Nerdwallet for supporting information, business credit isn't my first language.    

 

There is a Business Credit forum (in case you aren't already posting/reading over there) where you might get more insight.  

 

I know that consumer credit is a lot more regulated than business credit, and with that I think I've dumped everything I know on the topic into your thread.  Sorry I peaked in just two posts.