“Understanding the Effects of Business Credit Cards on Personal Credit”

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Understanding the Impact of Company Credit Cards on Your Credit Score

At O1ne Mortgage, we prioritize educating our clients about consumer credit and finance. This article aims to provide an objective view to help you make informed decisions regarding company credit cards and their impact on your credit score. For any mortgage service needs, feel free to call us at 213-732-3074.

Does a Company Credit Card Affect My Credit Score?

A company credit card can influence your credit score under certain conditions. If you are a business owner with a small business credit card reported to consumer credit bureaus like Experian, TransUnion, and Equifax, or if you are an authorized user on someone else’s credit card, it may affect your credit score. However, if you work for a large company and have a corporate credit card, it generally won’t impact your credit scores.

Scenarios Where a Business Credit Card Might Affect Your Credit Score

There are three common scenarios where a business credit card might impact your credit score:

1. Business Owner with a Company Card

Business owners, including freelancers and gig workers, may open a small business credit card to separate personal and business expenses. Applying for the card might lead to a hard inquiry, potentially lowering your credit score. Additionally, credit card issuers might report business credit card information to consumer credit bureaus, affecting your scores.

2. Authorized User on a Business Card Account

If you work for a small business, the owner or manager might give you an employee credit card tied to their small business credit card account or add you as an authorized user. If the credit card issuer reports the account to consumer credit bureaus, it may appear under your name as well.

3. Corporate Card from a Large Employer

Large companies often provide corporate credit cards for business expenses. Even if the card has your name on it, the account won’t be reported to credit bureaus under your name, thus not affecting your credit scores.

Do Company Cards Show Up on My Credit Report?

Business credit cards may appear on consumer credit reports depending on the credit card issuer’s policies. If the issuer reports business cards to consumer bureaus, the card might show up in your credit report if you are the primary cardholder, an authorized user, or have an employee card from a small business credit card account.

Many issuers don’t report small business credit cards to consumer bureaus as long as payments are made on time. However, they may report negative information, such as late payments, which could harm your credit. You can call the card issuer to inquire about their reporting policies.

What if the Company Uses a Personal Credit Card?

Some business owners use personal credit cards for business purposes, especially in sole proprietorships where there is no legal distinction between the business and the owner. In such cases, the card will affect your credit like any other personal credit card. High balances relative to the credit limit can hurt your scores. Similarly, if you are added as an authorized user on your employer’s personal card, it will likely appear in your credit report and might impact your credit depending on how the account is managed.

Was My Credit Checked When I Got My Company Card?

Credit card issuers generally check at least one of your credit reports and scores when you apply for a business credit card. This credit check can result in a hard inquiry, which might lower your credit scores. However, issuers typically don’t check your credit report when you are added as an authorized user or receive an employee card, as you are not personally responsible for the debt.

How Can I Avoid Negative Impacts to My Credit?

To prevent a business credit card from hurting your credit, ensure you don’t fall 30 or more days behind on any payments. If you are an authorized user on someone else’s credit card and the account is negatively affecting your credit, you can request the issuer to remove you as an authorized user and stop reporting the account to credit bureaus. Alternatively, you can file a dispute with each credit bureau directly.

Monitor Your Credit for Changes

Various factors can influence your credit score, including personal credit cards and loans. You can monitor your credit for free with Experian and gain insights into the factors affecting your scores. If you are looking for a credit card, Experian can show you offers based on your unique credit profile.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with all your mortgage requirements.

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