Am I Eligible for a Business Credit Card?

There are lots of different types of credit cards, but most fall into one of two buckets: personal and business. Nearly anyone can apply for a personal card, but the question I get over and over is this: do you actually need to own a business to get a business credit card?

It's worth answering clearly, because business cards open up a whole separate set of welcome bonuses and category bonuses, and they're a great way to keep your business and personal spending separate. In fact, several business cards currently have some big best-ever welcome offers, which is partly why I'm getting this question so much right now. The good news is that qualifying is probably easier than you think.

So, do you need a business?

Yes, you need a business to open a business credit card. But the important part is how a bank defines "business," because it's almost certainly broader than what you're picturing.

Do you sell things on Amazon, eBay, or at the occasional market? Do any freelance writing, design, photography, or consulting? Rent out a property? Tutor kids, babysit or coach sports on the side? If you sell goods or services of almost any kind, that activity can qualify you as a business owner, even if it's a small business and even if you've never thought of it as a "business."

How do you put that on an application?

You don't need a registered entity like an LLC or a corporation to apply. When you fill out a business card application, it'll ask what type of business you have and request a business tax ID. If you're operating on your own, you can usually select sole proprietor and, in most cases, enter your Social Security number as your tax ID. (If you'd rather keep your SSN off the application, you can get a free EIN from the IRS in a few minutes.)

One important caveat: banks sometimes ask for documentation to support that you have a business or earn income outside of an employer. So always tell the truth on your application, list your real activity and a realistic, honest estimate of revenue (which can be small, or even zero if you're just starting).

What it means for your credit

Applying for a business card will result in a hard pull on your credit report, and banks look at your personal credit score when deciding whether to approve you. But once you have the card, that line of credit is generally separate from your personal credit, so day-to-day activity on the business account usually won't show up on your personal report (unless you default on payments).

Bottom line

You do need a business to open a business credit card, but you might already have something that qualifies. So if you're interested, check out my take on the Best Business Card Offers right now.