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Updated on Wednesday, July 22, 2015
Credit scores have become an incredibly popular personal finance topic in recent years. The rise of sites like Credit Karma, Credit Sesame, Quizzle and the reporting of credit scores with credit cards have made a once complicated topic more accessible to the public. But one element of credit scoring still confusing plenty of people: does my corporate card affect my credit score?
Unfortunately, the answer isn’t exactly a definitive yes or no. The answer is: it depends.
Who Applied for the Card?
Receiving a corporate card doesn’t always mean you applied and will get a ding on your credit report. Some companies make new employees (or those receiving a company card) an authorized user. This means you didn’t fill out an application to receive a card. You are given a supplementary card that is tied to your employer’s line of credit. Any damage you do will impact his or her credit report (so behave properly). This would be more common for small businesses instead of large corporations.
Other companies may require you to fill out the application and run a credit check in order to receive the card. Or if a credit card magically appears on your desk, review the papers you signed during your company orientation. You likely authorized the company to get you a corporate card.
Don’t panic if a credit inquiry goes on your report. Applying for a credit card usually only impacts your credit score by about 10 points and those 10 points tend to rebound relatively quickly.
If you are the one applying for the card, at a credit inquiry is likely to be on your credit report and potentially the monthly activity. Often the positive monthly activity is not reported, but if it is, then it can help improve your credit score (assuming you behave responsibly). However, when you leave the company and the card gets closed – you will see a drop in your available credit and thus an increase in utilization. You’ll eventually also lose that healthy history off your report, so be sure your corporate card it isn’t your only credit card.
Was a Payment Made Late?
It doesn’t matter if you’re responsible for making monthly payments or your company handles the bill; if your payments are late then your credit report will get hit. Typically, the payments need to be 60 to 90 days overdue in order to get reported to the credit bureaus. But keep in mind that you’re going to be the one feeling the pain if the payments don’t get made.
Don’t be passive about your corporate card. Be sure to log in each month and check that your company is making payments.
Best Way to Find Out if it Impacts Your Credit Score
The easiest way to find out how your corporate credit card impacts your credit is to pull your credit reports.
See if it gets reported to the credit bureaus on a monthly basis or if there was even an inquiry for you to get the card. If you filled out the application for the card – there might be a credit inquiry and a small hit on your credit report. If your company just gave you a supplementary card, it’s unlikely to pop up on your credit report.
But keep this mind: in most cases any negative information will show up on your credit report. Make sure those bills are paid.
It’s easier to have a company credit card that automates your expenses to some degree. You may not have to keep track of every receipt or fill out reimbursement paperwork on a monthly basis. However, you are putting your faith in your company’s system. If your company is late making a payment, then the derogatory mark can show up on your credit report and impact your credit.
You could have the option of asking your company if you can use a personal credit card and just get reimbursed monthly. This puts you in control of ensuring the bill is paid on time and enables you to earn rewards and miles on the company dime. But there are some downsides to this method.
- The company could be late reimbursing you, so you’re floating the money out of your own pocket to make the payment.
- You could be driving up your utilization, which could negatively impact your credit score. If you need to charge $10,000 in a month for work, but you only have a $15,000 limit – you’re 75% utilized and that looks bad to the credit bureaus. You might want to get another credit card that’s specific for business purchases, even if it’s a personal card. This will increase your credit limit and make it easier to track personal and business expenses.
Ultimately, you need to pick a method that’s right for you both financially and psychologically.