Does corporate credit card build credit?
The utilization of a business credit card is one of the easiest ways to manage business-related transactions. Corporate cards are favorable compared to reimbursements because they prevent users from dipping into their funds. Moreover, the finance team can directly receive statements to make auditing and accounting easier. But you might wonder whether corporate cards have any effect on your credit score.
Business credit is directly linked to a company’s financial statement - including corporate cards. However, if you own a small business then your company card is included in your personal credit score. Some businesses also include joint liability; so defaulting on a card might reflect on your credit score.
The credit check process is an unavoidable part of applying for a card. Any credit card, for that matter, involves a credit check. This is because you are taking responsibility to pay off all loans and interest amounts. Applying for a card under your name (or if you are the primary for a company account) means that your personal credit score will be examined by the lending body.
Your credit score is a compilation of all your loan payments - the timely manner in which you pay, the amount of debt you have remaining, and any assets that can be used as collateral.
If you are simply a company employee then your personal credit score might not be checked. All your payments and debt will be added to the company credit score. This is especially true for a large company. But if you are an employee applying for a small business credit card, then there is a chance your credit might be examined.
When a business signs up for credit, then liability rests with the primary listed on the account (usually the business owner). This liability extends to every card issued for employees in the name of the business. As a result, all transactions done by employees for business purposes lend to the company's credit score. In turn, the company is liable for paying off all dues, timely payments, and any loan carry-overs. This kind of corporate liability, when controlled responsibly, can help your credit score soar.
Corporate credit cards don’t need to be a pain point for your finance team. Customization of policies is a good way to keep your budgets under the limit. Corporate cards will automatically reinforce policies without manual intervention. You can link cards to customizable budgets, create policies, and prevent misuse of cards or unauthorized transactions. The best part? Adding a budget or card limit doesn’t deduct your Bill Pay balance. Money only gets deducted when the card is swiped.
Corporate cards are a fantastic way of building your business credit history. Applying for a card early on, even if you don’t intend to use it, establishes your credit score early in your business journey. Keeping payments small, paying dues on time, and underutilizing your credit limit can help your company's credit score grow. This is ideal for when you truly need to apply for loans or larger credit amounts. Lenders and banks lean towards businesses with a strong company credit score - and corporate credit cards are an easy way to build one.
Corporate credit cards from Volopay are clean and swift to use. They allow complete flexibility in terms of usage, as well as safety. You can apply for physical cards, as well as unlimited virtual cards. Ensure that all your expenditure is tracked in real-time.
Volopay lets account admins add approvers of the first and second levels. This allows every project manager and administrator to have full control over corporate credit card spending. These approvers can also request more details about transactions, adding to the ease of auditing.
All cards come with built-in spend controls to create a healthy spending culture in the company. Admins can set expenditure rules so that out-of-policy transactions are automatically declined. Perfect for ensuring your business credit is never in trouble.
Corporate credit cards include a built-in credit line to aid your business credit. The spend controls help stay in check, while the automation of repeated expenses adds to your credit score. Your credit line grows as you scale your business. With Volopay, you don’t even need a personal guarantee to obtain a credit line. Your corporate credit card comes with a pre-loaded credit line of up to $100,000.
Many companies offer points and reward systems for credit card transactions and early paybacks. Volopay’s credit cards offer better. With a Volopay corporate credit card, you can earn direct cashback for foreign transactions.
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