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Do corporate cards affect someone's credit score?

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    If you're a business owner and you're new to business credit cards, you may have some questions about how they work. For some people, the potential effect a business or corporate credit card may have on their personal credit score could be one of those questions. So, do corporate credit card accounts affect personal credit scores?

    What is a corporate credit card?

    Firstly, it's important to note that, while often used interchangeably, a corporate credit card and a business credit card are two different things. The main difference is where the liability for the debt falls. With small business credit cards, the primary cardholder is usually personally liable for any accumulated debt or assessed fees. With corporate credit cards, the company is typically responsible for the debt.

    Corporate accounts generally have different requirements than small business credit cards. For instance, corporate accounts are often only available to companies that have an annual revenue in the millions. Instead of using the business owner's personal credit history to determine creditworthiness as they would for a small business card, lenders base their decision on a company's financial situation.

    One of the benefits of corporate cards for bigger companies is the ability to have credit cards for multiple employees. Small business credit cards for employees certainly exist, but once a larger number of employees become authorized to spend on behalf of the company, a corporate credit card may make more sense.

    Do corporate cards affect personal credit scores?

    This is where the distinction between corporate credit cards and business credit cards becomes important, as the effect of these cards on personal credit scores differs.

    Business credit card

    Because a business credit card is typically backed by the business owner's personal finances, there is the potential for more of an effect on one's personal credit score, which may see a small and temporary hit after a credit inquiry for a business card. However, if you're approved and using the card, what happens to your personal credit score may vary.

    While most business credit card activity is reported to the business credit bureaus, some information may also be reported to the consumer credit bureaus, such as when a business account becomes delinquent or has a negative payment history.

    If you use your business credit card responsibly and are consistently making timely payments, you may not see any impact to your personal credit score.

    Corporate credit cards

    Now, does a corporate credit card affect your credit score? It's unlikely.

    Corporate cards are backed by the corporation you work for, meaning you usually don't have personal responsibility for paying the credit card bill. Some issuers may run a personal credit inquiry if a corporate card is being issued to you specifically, which could lead to a small and temporary hit to your personal credit score. However, the company's corporate card activity will likely not impact your personal credit score.

    Does a corporate card affect a business' credit score?

    When it comes to whether credit cards affect business credit scores, the answer is similar for both corporate cards and small business cards.

    The short answer is yes — corporate credit cards may affect business credit scores. The activity of both corporate credit cards and small business credit cards is usually reported to business credit bureaus. The credit bureaus will take this information and use it to calculate a business' credit score.

    Does a corporate credit card build credit? It can! With consistent, responsible use, you may see your business credit score improve. Positive payment history, length of credit and debt obligations can all contribute to building a business credit score.

    In summary

    Do corporate cards affect credit scores? What about small business credit cards? The answer varies depending on the type of card your company has and whether you're concerned about your personal credit score or your business credit score. Any type of company credit card activity will be reflected in a business credit score, but only small business credit cards are backed by personal finances. This means corporate credit cards are much less likely to affect a personal credit score, but small business credit cards might.

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