You're holding your first business credit card in your hand. Now you feel as if your business is "real".

Feels good, doesn't it?!

Let me ask you a simple question about that credit card. When you applied for it, did you have to provide your social security number? You didn't get it through your business's tax identification number only, did you?

Hmmmm. Just as I thought. Sorry to burst your bubble, but technically that's not a business credit card.

Personal credit card used for business

It's a personal credit card you're using for your business. The difference? Take a good look at the name on the card. Your name - and your business name. Yep. Any activity on the card - either good or bad - reflects on your personal credit. It does virtually nothing to build true business credit for your fledgling company.

Many times, a small business like yours may not be eligible for a small business credit card. It's easier for some to get a credit card dedicated to business purchases, but that is still attached to your personal credit. Sometimes a bank official signs you up for this and doesn't even think to tell you this difference between a real business credit card and a personal card used for your business.

Be careful when you apply for a card. Don't be afraid to ask specific questions. You need to be aware if your personal credit is going to be affected by using the card. It would be a shame to hurt your good credit rating because your business ran into some tough financial times.

Secured business credit card

Don't look so dejected. While it's not the best of situations, at least you're now aware of it. You may want to think about getting a secured business credit card for your new venture. This is one which requires you to place a specific amount of cash in a bank account before you can use it. The spending limit depends on the cash in your account - you can't spend more than what's in the account.

The money in the account isn't touched unless your business defaults on the payments. In this way, you're building good credit for your company. Ask when you apply, when the spending limit is raised. Also, ask if it could ever be converted to an unsecured business credit card.

Unsecured business credit card

And that's eventually your goal. An unsecured real business credit card. This is a valuable resource for your company. Not only will you be able to make major - necessary - purchases with your card that can catapult your business to even greater success, but it will build help your business credit profile up to where you can qualify for much larger lines of credit & loans.

An unsecured business credit card is issued in the name of your business based on the current credit status of your venture. All activity on this card - again, whether it's in the form of timely payments or late payments - is a reflection of the business itself and not your personal credit. In fact, all the activity is eventually recorded with Dun and Bradstreet (D&B), and other pertinent financial institutions. All debts that accumulate on the card are the responsibility of your business.

Knowing the differences in the types of credit available before you apply for a card can help you avoid some serious financial mistakes - and may in the long run save your personal credit. Even if you only hit a few temporary bumps in the road, having your business credit linked to your personal credit may mean disaster for your personal finances. And you have enough to worry about, right?