Does My Business Credit Card Affect My Personal Credit Score?

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Business credit cards are designed to separate business expenses from personal expenses. Rather than using your personal credit card to make large purchases, you can use your business card and easily keep track of your expenditures. Despite this separation though, most business card issuers will require a personal guarantee for the card, in the event that the balance is not paid off. This brings up a valid question: "Does my business credit affect my personal credit score?" Let's take a closer look at how business credit and personal credit connect with one another so you can prepare for the chances to come. How Business Credit Card Issuers Report to Credit Bureaus Your payment history and account activities can be reported to two different sets of credit bureaus: consumer credit bureaus and commercial credit bureaus. The consumer credit bureaus are in charge of your personal credit score, while the commercial ones are in charge of your business credit score. Different credit card providers report to different sets of bureaus. Nearly all of them will report business credit card transactions to commercial credit bureaus, but many will not report activities to consumer credit bureaus. Bank of America, Chase, Wells Fargo, and Citi all report to commercial bureaus but not consumer bureaus. That means that the activity on your business credit card will not have an impact on your personal credit (see the exception to this in the next section). If you're looking to boost your personal credit score with your business card, you will need to make sure your bank reports to consumer credit bureaus. American Express, Capital One, and Discover do so for their business credit cards. Just keep in mind that late payments on your business card will have a negative impact on your personal credit at this point, but they may not with the non-reporting card issuers. Severe Delinquencies Will ALWAYS Hurt Your Personal Credit Assuming that you signed off as the personal guarantee for your business credit card, you will be the one that has to pay for a delinquent balance. If the card company sends your balance to collections or sues you for the money, your personal credit will be hit just as bad – if not worse – than your business credit. Payments that are 30 days late may not be reported to consumer credit bureaus, depending on your bank, but severe delinquencies will no matter what. That's why it's so important to keep up with your business credit card payments. Only the Primary Cardholder Is Affected If you have employee accounts tied to your business credit card, your employees will not see any changes to their personal credit. Only the primary cardholder (which typically doubles as the personal guarantee) will receive the positive or negative effects of the business account on his or her personal credit. Keep this in mind as you start giving out secondary cards to your employees because you will be the one responsible for paying the balance. Monitor your employees' transactions closely, and confront...

What You Should and Should Not Buy with an Enterprise Credit Card

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Enterprise credit cards were originally made to help businesses pay for their expenses. Nevertheless, many business owners have taken advantage of their high credit lines and other perks to make personal purchases with their company accounts. The credit card company may not have an issue with this, assuming you pay the card balance back, but there is still a spending etiquette that you must keep in mind with any business card. Here's a guide explaining what you should and should not buy with an enterprise credit card. How to Spend Money on an Enterprise Credit Card Ideally, your personal expenses should be kept separate from your business expenses. That means that every dollar you spend on your enterprise credit card is somehow linked to your business. Examples of business expenses include: Office supplies Uniforms Furniture Equipment Catering for conferences, employee meetings, etc. Hotel fees (for business trips) Flights Rental cars Fuel Utilities and other bills related to the business Remodeling fees As long as the money is going toward your business and not your personal life, it can come from your business credit card. Keep in mind that you will have to pay the balance back, just as you would with any other credit card. It may be tempting to blow through your available balance quickly, but only do so if you know you can pay it back in a reasonable amount of time. How NOT to Spend Money on an Enterprise Credit Card You should never put personal purchases on your business credit card, even if you pay them back quickly. For instance, you may be tempted to buy a new bedroom set for your home with your business card because it has a high enough spending limit to support such a purchase. If you do that though, you will not only be abusing the line of credit available to you, but you will also be mixing your personal finances and business finances. Come tax season, this will make it much harder for your accountant to work through your profit and loss statement. Proper Spending Habits Lead to Easy Bookkeeping Think of your enterprise credit card as a real-time ledger of your business expenses. If you keep your personal bills on a separate account, you can simply hand your CPA all of your credit card statements at the end of the year. Since all of the transactions will be for your business, your CPA can easily create tax deductions for you and reduce your taxable income as a whole. This ultimately saves you money in labor because your accountant does not have to assess all of your receipts individually. Keep All Receipts Anyway Even if you use your enterprise credit card purely for business expenses, there may come a time when some of your transactions are questionable. This is especially true if you are buying products from a big box store like Walmart or Target. You need receipts to show that those purchases were in fact used for your...

Top 5 Rules for Using Enterprise Credit Cards

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Whether you have an enterprise credit card, a small business credit card, a mid-sized business credit card, or anything else along those lines, you need to know how to effectively use your card to build business credit and manage your finances. Once you understand the process of spending money on your card and paying it back quickly, you will be able to enjoy the benefits of business credit without going into debt. Listed below are the top five rules for using enterprise credit cards so you can make the most of this opportunity. Never Put Personal Expenses on Your Enterprise Credit Card As tempting as it may be to use your business line of credit for personal expenses, you need to keep your business and your personal life separate. If you only use your enterprise credit card for business expenses, you can turn all of the credit card documents over to your accountant to deduct from your taxable income. If you have personal purchases mixed in, you will have to go through every transaction individually and determine whether or not it was for the business. Save yourself the hassle and keep your spending separated. Only Spend What You Can Realistically Pay Back Do not look at your enterprise credit card as extra money for you to spend for your business. That's not how credit is supposed to work. While you can use it to make large purchases you do not have the funds for at this time, you still need to have a plan to repay your card in a timely manner. Keeping a low revolving balance on your card will ensure your business credit score stays high, and it will save you from paying a ton of money in interest for high, longstanding debt. Monitor Employee Transactions on Your Business Credit Card If you give your employees cards that tie into your main enterprise credit account, you need to make sure you watch what they spend on their cards. You should be able to see the transactions for each sub-account on your main account. If you notice anything unauthorized or suspicious, you can talk to the employee about the expense in person. No matter how much you trust the people working for you, there is always a chance that they will take advantage of your kindness. Watch your funds closely so you don't end up spending extra for someone else's expenses. Understand the Terms of Your Rewards Program (If Applicable) If you have a rewards program for your enterprise credit card, make sure you understand the terms of it in full. This is especially true if you have a high annual fee tied to the card. Your rewards may be able to offset that cost, but only if you know how to use them. If your card comes with revolving rewards categories, understand when those categories change throughout the year. Maximize the amount of loyalty points you get from your card so you can make the most of money...