A December report by the CFPB revealed that credit card issuers normally report to credit bureaus monthly regarding consumers’ revolving credit but are “less likely” to report on small business cards.
John Ulzheimer, the president of consumer education at SmartCredit.com, said that card issuers will not usually report to credit bureaus regarding small business credit cards with a personal guarantee unless the individual goes into default, CreditCards.com reports.
“If it is a small business card, and the issuer of the card happens to report it to the consumer credit bureaus, then the card is treated no differently than a true consumer credit card,” Ulzheimer said, according to CreditCards.com.
Additionally, the CFPB report said that reporting to credit bureaus by creditors is voluntary and that creditors may only report information about borrowers using a certain product. The report said that if a creditor chooses not to submit data to credit bureaus, other firms may refuse to submit data, reducing the efficacy of a creditor community resource.
The CFPB also said in the report that consumers are more likely to repay their financial obligations if they know that a creditor will report late payments or a delinquent account, which could ultimately affect their overall credit history and score. When creditors report timely payments, the borrower benefits in the form of a higher credit rating and better credit history.