A business credit card is a tool that helps a company cover its basic expenses. It is a common financing option, similar to a commercial line of credit, loan or investor funds. When you apply for a business credit card, the application requests your personal information in addition to business data. You should investigate how the business credit card account could affect your credit score.
About Credit Scores
A credit score measures your trustworthiness as a credit risk and helps banks decide whether they want to extend you a business credit card. It applies to both individuals and businesses. A credit score based on a personal credit report ranges from 300 to 850. Businesses also have credit scores in some cases, which range from zero to 100. The score is based on information reported to business credit reporting agencies about each company.
Does It Affect Personal Credit?
The activities involving a business credit card could affect the owner or representative's personal credit score. The responsible party listed on the account must provide his personal Social Security number, name and address to the business creditor. Business creditors usually report business credit card information to the responsible party's personal credit history if the account goes into default. Some creditors also may start reporting business debt on personal reports regularly.
Employee Cards
In some cases, an employer may offer a business credit card to his employee. The creditor may ask for personal information about the employee. In this case, it is also possible for the actions of the business to negatively affect the employee's personal credit history. If you're concerned about the risk, instead of accepting an employee card, you can inform the employer that you will use your own personal card and submit paperwork for reimbursement.
Suggestions
Knowing that a business credit card has the potential to affect your personal credit history makes it important to maintain the account responsibly if you choose to use the card. Pay your bills on time and in full each month. Whenever possible, pay off each business credit card debt transaction soon after submitting the charge, allowing you to maintain a zero balance on the account.
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