Your Business Credit

Keep your personal credit separate from your job


Startups and small businesses often operate on small budgets and if your boss asks you to take out a card for business expenses, think twice before entangling your personal credit with theirs

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QuestionDear Your Business Credit,
I am working for a startup business that I would like to quit because it isn’t going anywhere. Unfortunately, I allowed my boss to scam me into using my credit to get a business credit card since her credit was too low for it.

My question is: Is it possible to take my name off the credit account since her name is also on it? I am the main holder of the credit account, but I want to quit the job and not have the responsibility of having that business credit on my credit. I am only 21 and I am honestly freaking out about this. – Holly

AnswerDear Holly,
I don’t blame you for being worried. From what you are saying, it sounds like you could be responsible for the debts on the account.

There are several ways someone can get access to a credit card by piggybacking on the credit of another individual. One way is by having someone with good credit serve as the primary account holder and for the person with lower credit to become an authorized user. The primary account holder essentially gives the authorized user permission to use her account.

There are other possible relationships. You might have become a co-signer for the account, agreeing to pay the debts if your boss defaulted. You might have become a guarantor for the account, in which you agreed to pay the debts, but have a little more protection from creditors. Or you might have opened a joint account, in which both people are responsible for the debt. For a guide to the different possibilities, see “Which cards let you be a co-signer, joint account holder.”

Given that you are very young and have not had many years to build your own credit, it sounds as if you may be the primary account holder on the business card, with your boss as an authorized user. Let’s assume that’s the case. If the startup is not doing well, there is a very real possibility it will not be able to pay its bills in the future, so now is a good time to protect yourself. As you correctly assume, it is not in your best interest to be responsible for these debts.

Given that you are 21, you are at a point at which you need to build the best personal credit you can. You may want to rent an apartment, purchase a car or buy a home – all of which depend on having strong personal credit. While not all business cards report to the credit bureaus that track your personal credit, it is possible they will, especially if your credit card is paid late.

That is not to mention that business credit cards lack some of the consumer protections of personal credit cards under the Credit Cards Accountability Responsibility and Disclosure Act of 2009, commonly known as the CARD Act. For instance, under the law, consumer cards’ interest rates can rise only under a limited number of circumstances – you’ve missed two consecutive payments, or the Federal Reserve raises its key lending rate. But business cards are free to increase rates more quickly. You may not be the one paying the credit card bills, so you are dependent on your boss to make the payments on time to maintain your interest rate, and it sounds as if there is a risk she won’t be able to do this in the future.

The good news is that if your boss is an authorized user, then you should be able to remove an authorized user from your account immediately just by calling the issuer and asking.

Of course, you’re in a delicate situation that will require some diplomacy. Although you want to quit your job, you may not have lined up another one yet, and you may need your paycheck until you do. Depending on your line of work, that could be months away.

I’d suggest that you call the credit card company and find out what arrangement you and your boss made with regard to the credit card. Ask what it will require for you to remove your boss from the card.

Once you know what you need to do, I’d recommend talking privately with your boss in the near future. Let her know you will need to do X in the near future – whether that is renting an apartment or some other pursuit you are planning that requires good credit – and need to end the credit card relationship by the end of the month. A reasonable boss will say, “Thank you for letting me know,” and then figure out what she needs to do on her own.

If she tries to persuade you to extend the relationship, stick to your guns. Find a truthful way to show that you are still on her team, but can’t continue to bear this responsibility. For instance, “You’ve got an incredible vision for the company, and I plan to continue working hard to support it, but I also need to be able to buy a car that can get me to work reliably and can’t continue the credit card arrangement. I hope you understand.”

Remind yourself that the longer you keep her on the card, the more potential there is for her to rack up charges on the account.

If you did happen to have a joint account, co-signed or guaranteed the card, then it will be more difficult to close the account. For more information on how to do this, see “Closing joint accounts after a breakup” and our story, “Co-signer, joint account holder, guarantor: Know the difference.

Once you pull the plug, make sure there aren’t any recurring charges set to appear on your card and notify your credit card issuer not to pay those charges anymore. I’m hoping you didn’t agree to any long-term service contracts on behalf of the company. If you did, you’ll have to review their terms and find out how to exit them first.

Also, let your boss know she needs to make alternative arrangements to handle any such charges. This could require a little time and effort on your part, but once you’re done, you’ll have the peace of mind that you alone control your destiny when it comes to your credit. You can put this behind you – but don’t delay!

See related: Co-signer, joint account holder, guarantor: Know the difference, Business credit card can damage your personal credit score



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