Does Using A Corporate Credit Card Affect My Credit Score?

A credit card is one of the easiest ways of making purchases, especially when one does not have enough money at hand to make a large down payment immediately. 

Credit card debt is also a form of personal loan where the borrower is allowed a certain interest-free period, within which he or she has to repay the money or risk paying interest at a very high rate.

While using a personal credit card can certainly impact one’s credit score, the same could happen even if one uses a business credit card either as an employee or a small business owner. 

To be clear, the degree to which one’s credit score is impacted depends on the type of credit card and how one is using it. What also matters is whether one is the primary account holder, an authorized card user or an employee of the company, which has given out corporate credit cards. 

Using Corporate Credit Cards

Small business owners often prefer using company credit cards as it can not only make managing finances more efficient, but also can be tax efficient. 

While keeping personal and business expenses separate is often advocated, when it comes to the CIBIL score, they are co-related and one can, and does, influence the other. One’s appropriate or inappropriate handling of the business credit card can impact one’s CIBIL score positively or negatively. 

In fact, as soon as a person applies for a business credit card, the bank will scrutinise his or her personal credit report. And each time one makes a big purchase on the business credit card, it can have an impact on the CIBIL score, thereby impacting one’s personal credit score. 

Even if a business credit card issuer does not report one’s account activity to a credit bureau in the normal course, the account can be reported if one delays or defaults on a credit card payment. This can impact one’s personal credit history and CIBIL score, which, in turn, could impact one’s ability to borrow in the future. 

So, what can a business owner or employee who has a corporate credit card do to make sure their CIBIL score remains high? This can be done by keeping one’s combined credit utilisation ratio on all the credit cards in one’s name to less than 30%. As business credit cards often have higher credit limits, one can make use of an enhanced credit utilisation limit on an overall basis. 

Here is how one can efficiently use a business credit card so as to not let his or her CIBIL score get impacted. 

Monitor The CIBIL Score:

One can keep track of one’s credit score by constantly checking the same. This will go a long way keeping one’s credit card debt below critical threshold levels. 

Make Timely Repayments:

If one keeps repaying one’s credit card debt timely, one can maintain a clean payment history and thereby also keep one’s CIBIL score high. Moreover, if one chooses to pay off the entire amount in one go, instead of just the minimum payment due, one can avoid paying any interest.

Keep Credit Utilisation As Low As Possible:

If one keeps the overall credit utilisation limit at under 30%, one can maintain a high credit score. This way one can be eligible for a personal loan at the best interest rates, if need be, anytime in the future. 

Conclusion

Your personal credit score can be impacted by how you use your corporate credit card. It is, therefore, important to keep track of your overall spending and also keep your personal credit habits in check. 

Moreover, it is important to educate yourself on the way a business credit card can impact your personal credit profile, as it could have significant consequences on your future borrowing. If your personal credit score does get negatively affected by activity on your business credit card you may find it difficult to get a personal loan for the amount you want and at the best interest rates in the market.