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Small business borrowing is generally not reported on owners' consumer credit reports unless they fail to pay on time. But with banks facing rising defaults, at least one lender is moving to add small business loans to borrowers' consumer credit files, meaning small business owners could soon find that their business debts are affecting their personal credit. Any debt that owners personally guarantee—including many business loans and credit cards—could be reported.

In more than 20 years as an entrepreneur, (Gary) Kerr says business loans had never affected his personal credit score. Kerr took out the Small Business Administration-guaranteed loan through Capital One in 2005 to buy printing equipment for his three-person fine art reproduction company in Davidson, N.C. He personally guaranteed the loan—as the SBA requires—and owes about $20,000 remaining. Although he has never missed a payment and his credit score, at 830, is nearly perfect, he worries that his credit will suffer when the business debt suddenly appears on his consumer credit file. He's also disturbed by the precedent: "I signed on [for] a business loan with my LLC. Now three years later you want to make it a personal note?" he says.

Credit experts say lenders don't usually report business loans to consumer credit bureaus unless the borrower falls behind. "It used to be nonexistent," says Sharon O'Connor Clarke, a principal consultant with FICO (FIC), the credit scoring company formerly known as Fair Isaac Corp. "In recent years some banks have begun reporting [business credit]. It's still a fairly rare occurrence for them to report to the bureaus."