When an entrepreneur applies for a small business credit card, his/her personal credit history will be considered. Needless to say, a high credit score would will guarantee an approval while a low credit score may get your application declined. Yes, issuers of business credit card take into account the business owner’s personal credit history especially if corporate credit history has not yet been established.
What About Personal Liability?
As the business owner, getting approved for a business credit card makes you accountable for all the charges that would be incurred using your credit card. This is the “personal liability” clause included in your business credit card Agreement. This simply means that regardless of who or how the charges were made- you will be liable to pay your business credit card charges.
It may take a year or two before you can establish a solid business credit history. This is why entrepreneurs are advised to register with a business credit tracker as soon as your company is launched. After registering with a business credit bureau, you must build up your credit history by maintaining a good relationship with creditors.
Why Use Business Credit Cards with Extreme Caution
Business need to be very cautious about using their business credit cards. First, they need to make sure that only official business expenses are charged to the account. More importantly, monthly balances must be paid in full and on time. By doing this, an entrepreneur can build-up and maintain a good business credit record and protect his/her personal credit history from damages as well. Paying on time also eliminates additional fees that maybe incurred such as the interest rate and late penalty fees.
Some entrepreneurs may occasionally use their business credit cards for personal expenses. While this may seem harmless at first, such a habit must be avoided. Keep in mind that mixing personal and business expenditures into your business credit card account can affect your management strategy and financial decisions.
If you have employees and you plan to distribute supplementary credit cards, make sure that you will be able to monitor your account regularly. Protect your account from abusive use of employee credit cards by checking your credit card bills and logging in to your online account on a daily basis. Keep in mind that in case some of you employees misuse your business credit card account, you will still be responsible for paying the charges and it is your personal credit history that will be placed on the line.
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Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2007 |
