If you own a business and run its money through a line of credit, use a business line of credit or a business credit card when you have the choice. I gave business owners that advice in an early video of mine on beating the bank with Dynamic Banking. The reason is your personal credit report.
Personal cards and personal lines of credit show up on your credit report. Part of your score is how much of your limit you're using, which is called utilization. Carry $40,000 on a $50,000 personal line of credit when the statement closes, and your score can drop, even while Dynamic Banking is doing its job. What paycheck parking does to your credit score explains how each kind of line of credit gets counted.
Most business cards and business lines of credit work differently. As long as you pay on time, they usually report to the business credit bureaus and stay off your personal file. That means a business line of credit can carry a balance all month without showing up on the report a mortgage lender pulls. So when you refinance, apply for a home equity line of credit, or buy a car, your personal numbers look the same as before.
The exceptions start with the personal guarantee almost every small-business line of credit requires, which means you promise to pay it yourself if the business can't. Many lenders also report the account on your personal file once it goes past due. A few card companies report business cards on your personal credit no matter what, so ask before you open one. And applying usually means a hard inquiry, which is a lender pulling your credit report for an application, and it can cost a few points for a while.
Keep it to business money. Run personal spending through a business line of credit, and your books get messy. The interest gets harder to sort out at tax time, and you weaken the legal wall between you and your LLC or corporation. Running business revenue through your line of credit covers the bookkeeping.
Building credit comes first. Use it to open lines of credit, and then run your cash flow through those lines of credit to pay debt down. If your credit is weak, start with a secured card and work up to unsecured ones. Unsecured cards and lines of credit usually carry the better rates and rewards.
Before you sign for a business line of credit, ask the lender one question: does this account report to my personal credit file? The answer decides which line of credit should carry your working balance.