From the Editor: I am very pleased to share with you this guest post from Mr Credit Card of www.askmrcreditcard.com. Mr. Credit Card has a great, informative and extremely comprehensive website that covers a broad range of credit card topics-be sure to check it out. Today, Mr Credit Card is going to give a few facts that many folks do not know about business credit cards.
From my experience, people get more confused about business credit cards than any other type of credit cards. So today, I would like to clarify some myths about them in this post. Let’s begin.
Only businesses can get business credit cards – This is simply not true. Yes, there are “corporate cards” that are only available for larger businesses. But typically any business or even an individual can get a “small business credit card“. When you are filling out a application, you will normally be asked your Tax ID or EIN number. You will also be asked to give your social security number. If you leave the Tax ID part blank, then you will be simply considered a sole proprietor by the credit card issuer.
You are not solely liable in you default on your credit card – This is another false myth. For regular small business credit cards that are issued to small and medium size businesses, default on your card actually hurts the business owners. All business credit cards report your payments to one of the business credit bureaus, but not your personal credit bureaus. Hence, it does not help an individual in building a credit history and hurts them when they default or have a late payment. Only “corporate credit cards” do not hold the owners liable. But to qualify for a corporate card, a business must have attained a certain level of revenue and number of employees. Different banks and credit card issuers have different criteria.
You can get a business credit card even if you have bad credit – That is another myth. As mentioned earlier, when you apply for a business credit card, you have to give your social security number. Which means credit card issuers actually look at your personal credit history, even if you have a business credit history. If you have bad credit, then it is best that you rebuild your credit by taking the proper steps like making sure your credit reports are accurate, and paying all your bills on time. If you have no credit card, perhaps starting with a secured credit card will be a good idea to help you build a credit history.
Some final thoughts – If you have a small business, or are just starting a new business, it is best to have a separate credit card for your business expenses. It can be either a regular consumer credit card or a business credit card. Having a business credit card over a regular consumer card has its advantages because they tend to have features like monthly expense summary, set limits for employees etc. But as you have learned from this post, unless your company has a “corporate credit card”, you are still personally liable for your business credit card. Care must be taken to pay your bills on time and be current on all your payments.
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