How Do Company Credit Cards Affect Credit and Your Credit Report?

Having a company credit card can be a double-edged sword when it comes to your credit report. You can build credit by using it responsibly, but misuse can lead to a lower credit score.

Your company credit card payments are reported to the credit bureaus, just like personal credit card payments. This means that your on-time payments can help boost your credit score, while late payments can hurt it.

A company credit card is considered a revolving credit account, which means it has a credit limit and you can carry a balance from month to month. If you're not careful, you can end up owing money on the card, which can negatively affect your credit utilization ratio.

Using a company credit card wisely can lead to a higher credit score, which can open doors to better loan rates and more financial opportunities.

Company credit cards can have both positive and negative effects on your credit score.

The way you manage your company credit card payments is crucial, as payment history accounts for 35% of your credit score. This means that making timely payments and avoiding late fees is essential.

However, having a company credit card can also affect your debt-to-credit ratio, which counts for 30% of your credit score. If you're not careful, you might end up with high credit utilization, which can negatively impact your score.

The length of your credit history is another factor to consider. Since company credit cards are often used for business purposes, you might not have a long credit history with this type of account. However, having a longer credit history overall can still be beneficial, contributing 15% to your overall score.

If your company issues you a new credit card, it can cause your credit score to drop a few points due to new credit inquiries and account openings, affecting 10% of your score.

Business credit card activity isn't usually reported to personal credit bureaus, but some exceptions exist. Certain business credit cards, like the Capital One Venture X Business and Capital One Spark Cash Plus, will report late payments and serious delinquencies to consumer credit bureaus.

If you have a business credit card from American Express or U.S. Bank, late payments will also show up on your personal credit report. A delinquent business account can remain on your personal credit report for up to seven years, impacting your creditworthiness.

Business credit card issuers report to credit bureaus in varying ways, and it's essential to understand how your payments and delinquencies might affect your personal credit score.

Some business credit cards, like the Capital One Venture X Business and Capital One Spark Cash Plus, report late payments and serious delinquencies to consumer credit bureaus, negatively impacting your personal credit score.

Certain issuers report delinquencies, even if they don't report business activity to consumer credit bureaus. For example, American Express will report late payments, but only negative payment history.

A delinquent business account can remain on your personal credit report for up to seven years, affecting your creditworthiness.

Here's a breakdown of some popular business credit card issuers and their reporting policies:

Keep in mind that even if an issuer doesn't report business activity to consumer credit bureaus, they may still report delinquencies, which can impact your personal credit score.

Hard inquiries can remain on a credit report for roughly two years.

For smaller or new business owners, applying for a business card will generally result in a hard inquiry, which is a record of the credit check on your credit report.

As the primary account holder, you're considered the owner of the company and are responsible for the credit card account. The tax identification number you provide determines whether the card reflects on your personal or business credit score.

If you open the card with your SSN, it'll be linked to your personal credit score, and you'll likely need to provide a personal guarantee of repayment. This means lenders know you'll personally repay any debts if your business account defaults on its payments.

Authorized users, on the other hand, are employees who have been added to a credit card account by the primary cardholder. As an authorized user, your credit score will reflect how both you and the primary cardholder use the card.

Here's a breakdown of the key differences between primary holders and authorized users:

As an authorized user, it's essential to understand that you'll be impacted by the primary cardholder's payment history. If the account holder makes timely payments, it'll help build your credit score.

As an authorized user, you're essentially an employee of the primary cardholder, with the ability to make purchases on the card as if it's your own.

Authorized users' credit scores will reflect how both they and the primary cardholder use the card.

If the primary cardholder makes timely payments, it'll help build the authorized user's credit score.

However, if the primary cardholder fails to make payments, the authorized user's credit score will take a hit.

A business with a card that can be used by more than one person needs a system to identify who used the card and who must approve the purchase.

As the primary cardholder, you're the owner of the credit card account, and your tax identification number determines whether the card reflects on your personal or business credit score. If you open the card with your SSN, it'll be linked to your personal credit score.

You'll also need to provide a personal guarantee of repayment if you open the card with your SSN, which means lenders know you'll personally repay any debts if your business account defaults on payments.

The primary cardholder's credit score is a major factor in determining the business's credit score, so it's essential to manage your credit responsibly.

If you open the card with your business's EIN, it'll keep your business credit score separate from your personal one, which can help you maintain a healthy credit history for your business.

Here's a breakdown of how your credit score will be affected as the primary cardholder:

An LLC can have a limited impact on your personal credit report, but it's not completely separate.

If your LLC has debts taken out in the company's name, only the LLC's business credit report will be affected by whether you repay your debts on time.

However, if you cosign or guarantee an LLC loan, it can still impact your personal credit report.

Your business credit card activity can also impact your credit utilization ratio, making it harder to maintain a ratio under 30%, as experts recommend.

Business credit cards generally have higher limits, so carrying higher balances can significantly affect your credit utilization ratio.

Your personal credit score may also be affected by business credit card activity reported to both consumer and business credit bureaus.

Credit card utilization and scores are closely linked. Your credit score is calculated based on a number of factors, with payment history making up the largest single factor, accounting for 35% of your credit score.

Credit card payments are key in determining your credit score, with credit card companies being the least forgiving when payments are late and quick to report to credit bureaus when that happens. This can have a significant impact on your credit score.

The debt-to-credit ratio, also known as credit utilization, measures your outstanding debt in relation to your available credit. A good range to aim for is 30% or less, but the lower your credit utilization, the better it is for your credit score.

Credit utilization counts for 30% of your credit score, making it a crucial factor in maintaining a good credit score. Generally speaking, the lower the ratio, the better.

Having a business credit card that won't report your company activities on your personal credit has its advantages, but it may impact your credit utilization ratio. This is because business credit cards generally have higher limits, making it harder to maintain a credit utilization ratio under 30%.

Here's a breakdown of the factors that affect your credit score:

By understanding how credit card utilization and scores are linked, you can take steps to maintain a good credit score and make informed decisions about your credit cards.

Your credit score is a crucial aspect of your financial health, and it's essential to understand how company credit cards can affect it. Company credit cards can potentially hurt your credit, but they can also help build your company's credit file and history.

Payment history is the biggest single factor in determining your credit score, accounting for 35% of it. Late payments can significantly lower your credit score, so it's essential to make timely payments on your company credit card.

Your debt-to-credit ratio, also known as credit utilization, is another critical factor, counting for 30% of your credit score. A good range to aim for is 30% or less, but the lower your credit utilization, the better it is for your credit score.

The length of your credit history contributes 15% to your overall score, and people with excellent credit scores have an average age of 11 years for all their cards. This means that the longer you've had your credit accounts, the better.

New credit can cause your credit score to drop a few points, first when the creditor makes an inquiry on your credit report and then when the account is actually opened. This can affect 10% of your score.

To find out your credit score, you can check with your credit card company, as some provide it for free to their customers. You can also obtain a free credit score from various online sources.

Here's a summary of the factors that affect your credit score:

Business credit cards often require a personal guarantee because there's no business collateral for the issuer to go after if the credit card account defaults.

This means that if you run into trouble with your business credit card and have provided a personal guarantee, there's a higher chance delinquencies may be reported on your consumer credit report, which may negatively impact your credit score.

However, there are business credit cards available that don't require a personal guarantee. These credit cards exclusively rely on your business credit and won't look at your personal credit history.

To qualify for these types of credit cards, your company will need to have an established track record and be able to present financials, such as business tax returns, profit and loss reports, and business bank statements.

Brex, Stripe, Silicon Valley Bank, and Ramp offer business credit cards with no personal guarantee. Your bank or credit union may also offer one.