How Corporate Credit Cards Can Affect Personal Credit

AUG 24, 2011

A corporate credit card can be a great business tool. If you’re a business owner, it can help you track expenses and keep tabs on employee spending. If you’re an employee, a corporate card can make it easier to do your job without spending your own money.

But it’s important to understand how corporate credit cards affect personal credit – because they definitely do. You may think the corporation providing the card takes responsibility for the credit activity associated with it, so your personal credit won’t be affected.

The truth is that the individual whose name is on that corporate card is the person whose individual credit is affected by how that card is used and paid for. If your name is on the card, your credit is on the line.

Every credit card company will set its own policies for how it handles corporate cards and what it will do when payments are late or an account is in default. Before you fill out the paperwork for that corporate card, it pays to find out some information first:

Who pays the bill?

Since it’s a corporate card, the idea is for your employer to ultimately pay for approved expenses charged to the card. But are you expected to pay the bill when it arrives and then submit an expense report for reimbursement? Or will the bill go directly to your employer and someone in their accounting office is responsible for making timely payments?

What are you allowed to use it for?

Every employer will have rules for what expenses are OK to charge on your corporate card, and what charges are not reimbursable. Find out what those are before you use your card.

How does the credit card issuer handle problems?

Different credit card companies handle problems with corporate cards differently. Some may not immediately report late payments to the credit bureaus, understanding that the employee may not be responsible for the delay. Others might ding your credit immediately. But if a corporate account is in default for multiple months, it’s very likely to impact the personal credit of the employee whose name is on the card. Contact the card issuer and ask what its policies are for corporate cards.

Having your name on a corporate card links your credit reputation to that account. It pays to understand how corporate credit cards affect personal credit, before you put your own on the line.