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hi my name is john ulzheimer and i'm a credit expert who contributes to creditcardinsider.com and today's question is this it's one of my favorite topics can I get a business credit card to protect my personal credit report it's a fairly unknown and not often utilized strategy for actually protecting not only your personal credit report but also your personal credit scores all right so here's the deal when you have this this is a normal consumer credit card when you have a normal consumer credit card that information meaning that the liability the fact that it exists the date that it was opened the balance on it the payment history that type of information is reported to your personal credit reports as maintained Equifax Experian and TransUnion the fact that you have a credit card on your credit report is not a bad thing the fact that you may have a lot of debt on that credit card and perhaps late payments associated with that card that is a bad thing because that can potentially lower your credit scores and you can potentially lower them a lot so what some consumers have chosen to do and it's a little bit nefarious is if they have chosen to essentially form a non-existent LLC or non-existent business they'll just go to theirs they're a Secretary of State's website you can actually pay a couple hundred bucks and create a business that may or may not actually ever be a business or a function as a business but once you've done that you can also go out and get what's referred to as an EIN or an employment identification number or what's commonly referred to as a tax ID and that's a number issued by the Internal Revenue Service that essentially would be used for tax reporting on the business what some consumers will do with this information is they will actually go out and apply for small business credit cards using this newly formed company's information and the bank if they are in the business of issuing business credit cards will often extend credit to the business but ask that the business owner be personally liable for any default or any payments on the debt if they if they end up not being made so if the card is opened then the quote unquote business owner they're not really a business owner no can go out and actually use that card for the purposes of you know filling up their car buying airplane tickets do whatever they normally would do with their personal credit card but what the effect is is that essentially it keeps the consumers credit card debt off of their credit reports their personal credit reports because this is a small business card not a normal consumer credit card and so that can actually help your credit score or prevent the harm to your credit score of having a lot of credit card debt on your personal credit reports is it ethical you know I'm not saying ethics police but I would suggest that it probably is not because essentially you are lying to the credit reporting agencies or and and also the credit card issuer and suggesting that charges that would normally be made on a personal credit card are now somehow involved with the operations and funding of a business which it isn't but do people use this strategy to keep personal debt off credit reports of course they do it absolutely works not not many business credit card issuers report personally guaranteed business accounts to consumer credit reports I would suggest that if before you open a small business credit card that you talk to whoever you use to do your taxes either your CPA or your tax accountant and run the idea by them of forming an LLC like a single-member LLC and ask them hey look is there any potential blowback on me personally in my personal tax returns by doing this and then getting some advice from them that way as far as as far as any tax liability goes again that's something you're going to want to talk to your tax consultant or whatever does your taxes to get some more information about that I'm not a tax expert so you'd be better off talking to them if you have any questions pertaining to credit or other financial topics then please submit them to creditcardinsider.com or in the comments section below thanks for watching have a nice day