Understanding the relationship between business credit cards and personal credit scores is crucial for employees and entrepreneurs alike. A common misconception is that company-issued credit cards have no bearing on an individual's personal FICO score. However, this is not always the case. Late payments on a business credit card can indeed affect your personal credit score, especially if the card issuer required your personal information during the application process. Monitoring your credit reports for any corporate card activity is essential to safeguard your credit health.
When a business credit card is issued to an employee, the responsibility for payment typically falls on the employer. However, if the employer fails to make timely payments, it's important to understand the potential impact on an employee's personal credit score.
The Fair Isaac Corporation (FICO) has indicated that late payments on company-issued credit cards can negatively affect an individual's credit score in a similar manner to personal credit cards. This is contingent on whether the credit card issuer used personal information for the application and approval process. If this is the case, the business credit card may be linked to your personal credit report, and any delinquencies could reflect poorly on your credit history.
It's advisable to review your credit reports at least once or twice a year. This practice allows you to:
If the corporate card is listed on your credit reports, then late payments are being reported, potentially jeopardizing your credit score. Conversely, if the corporate card is not listed, the activity for this card is not being reported to the credit bureaus on a monthly basis.
To protect your credit score, take the following steps:
While specific statistics on the prevalence of business credit card impacts on personal credit scores are not widely discussed, it is known that payment history accounts for 35% of a FICO score calculation, according to myFICO. This underscores the importance of ensuring that all credit accounts, including business credit cards, are paid on time.
Kristie Lorette is a freelance writer and marketing consultant with expertise in personal finance. As the editor of The Mortgage & Credit Diva, a blog dedicated to providing valuable mortgage and personal finance insights, Kristie offers a wealth of knowledge to consumers. Her blog can be accessed at The Mortgage & Credit Diva, and more information about her writing and marketing services is available at Studio K Writing.
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