Do you have a corporate credit card in your name? If not handled right — by you or your company — it can affect your credit score.
Most credit card holders understand that the way they use a credit card can directly impact their credit score. But it is not just the use of their own credit card that can influence credit — it is the way a corporate credit card bearing their name is used, as well.
Employees who are granted access to a corporate credit card may find that such plastic carries great benefits. Among them: A corporate credit card makes tracking expenses easy, since all transactions are recorded on a single credit card statement.
This allows the company to see exactly what the employee spent on the credit card for travel, meals, entertainment and other expenses. When employees pays the credit card bills themselves, it is easy for the company to reimburse them.
However, just as a corporate credit card shares certain benefits with other plastic, like any credit card, it also needs to be used responsibly. That is because misuse of a corporate credit card can also show up on a credit history, potentially damaging the credit of the employee whose name appears on the card.
A corporate card may need to be paid by the employee, who then gets reimbursed. In other instances, the credit card statement may get paid directly by the company. But regardless of how the debt gets repaid, the individual whose name is on the card is the person whose credit is affected.
While that means misuse of a corporate credit card can hurt an employee’s credit score, conscientious use of the credit card could help improve his or her credit, according to credit bureau TransUnion.
Therefore, employees should remember that their personal credit score can tumble if the corporate card payment is late or unpaid. Missed or late payments resulting in penalty fees may need to be paid by employees whose names are on the card. Furthermore, under the rules of universal default, the interest rates on their personal credit cards could spike.
For employees concerned about how a corporate credit card may impact their credit scores, timely expense report filings are the name of the game. And, taking a look at their personal credit histories to keep an eye on the corporate cards impact may also prove helpful, since it could allow employees to highlight any late payments if their companies pay off the cards directly.
See related:Using corporate credit cards wisely