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By: Ikedi Ani-okoye
A couple of late credit card payments can make all the difference between a decent credit score and a rejected loan application – but what whenever your employer is the one paying your credit card bills?
Most people understand that it’s significant to keep your credit score in the best possible shape, by paying your bills on time and keeping your ratio of debt versus usable credit low. But corporate credit cards are often over-looked, and – according to Fair Issac Corporation (FICO) – they can actually impact your credit score the same way that personal cards can.
If you were needed to sign up for a corporate credit card for work expenses, the activity on that card may or may not show up on your credit report, depending on the credit provider. When it does show up, then it will affect your score, simple as that.
You won’t know when the activity is reported or not unless you check your credit score; you can check this for free once every twelve months at AnnualCreditReport.com.
Once you receive a copy of your credit report, check your revolving credit accounts, which are a list of every non-fixed credit facility you have, such as credit cards, depot cards and any other line of credit.
If you're corporate credit card is not listed, that means the activity on your card is not being reported each month. When your corporate card is listed, then your business spending and repayment forms could have an impact on your FICO score.
So why is this significant? Consider this scenario: say you’re late in lodging an expense claim with your boss, and your employer is then late in applying the defrayment to your corporate card. As a result, a business lunch you paid for on April 5 doesn’t get paid until June 1. Assume a similar situation takes place again the following month.
Meanwhile, in the first week of June, you travel out of town for a conference and charge £2,000 worth of accommodation and meal expenses to your card.
In the space of two months, your corporate credit card has experienced two late payments, and it currently has a higher debt-to-limit ratio. Consider, then, that this is the moment that you decide to apply for a car loan. You could be facing a higher interest rate, less flexible loan terms, or a lower loan amount – all since of your corporate credit card spending.
Also keep in mind that, generally, when an account becomes six months past due, all bets are off: your credit card provider will then notify the credit bureaus of your delinquency, regardless of whether the card is personal or business.
Every credit provider has a different policy regarding how it manages credit reporting of business transactions, so check with your employer – or, better yet, your corporate credit card provider – to see what policy applies to you.
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