A personal guarantee is the applicant's promise to cover the liabilities of a business account if the company itself fails to pay them.
A personal guarantee is the applicant’s promise to cover the liabilities of a business account if the company itself fails to pay them.
Also called: Personal liability.
How it works#
A personal guarantee sits in the application terms of almost every business card and suspends the separation between company and person for the payment case. It is why an application is assessed against the applicant’s personal credit file even though the account runs commercially. The guarantee ends with fulfilment or an explicit release by the creditor, not with closing the company.
Not to be confused with#
A personal guarantee is not the same as reporting to the personal file: whether the running account appears there is the issuer’s separate decision.
In German#
The German term is Persönliche Bürgschaft. German version of this term
Related terms#
- Application rule: An application rule is an internal issuer policy that rejects an application regardless of creditworthiness, for example because too many accounts were opened recently.
- Credit report: A credit report is the collection of reported credit accounts held on a person by a bureau, with limit, balance, payment status and the inquiries other lenders made.
Articles that use this term#
TopicEvery article and term onUS companies.
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