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Does a Business credit card affect credit score?

Corporate Credit Cards are the lifeline for enterprises, especially small businesses when there is a temporary shortage of funds.

Being the smart business owner that you are, you would already know how crucial it is to manage your credit score while funding your business.

So the big question is- Does a corporate card affect your credit score??

Let’s dig in!

What Is the Difference?

A business credit card mainly helps you keep tabs on business expenditures, track employee spending etc. It is important to keep it independent of personal credit cards.

However, they are co-related to one another and they do influence each other to a large extent.

Take note of the fact that if your credit card provider reports to the Credit bureaus, then you may expect a rise or fall in your personal credit score.

Is It Possible for a Business Credit Card to Affect Your Credit Score?

A simple short answer would be yes.

The long answer is that a corporate credit card starts to affect your credit score,  from the very moment you finish your credit card application because the card provider will immediately scan your credit with a hard credit examination.

Experts Say: Basically a hard credit review is when a credit card provider pulls up your credit report every time you apply for a home loan, increase your line of credit etc. A hard inquiry may involve a drop in your credit score when a request for credit information is put forth.

Why Do Business Credit Cards Have an Effect on Personal Credit Scores?

For enterprises, especially small businesses,  a personal guarantee is provided to get corporate credit. Since the process for credit card application remains the same for both business and personal credit cards, inevitably credit history will be pulled out, before any approval.

Additionally cross-check if the company card is seen on your card report. All you have to do is check if the card is in your name or if an inquiry was made to open the card.

If the answer is negative —- then credit scores will not be affected by corporate credit cards. If the answer is yes, then it will affect the score.

How Does It Have an Impact?

There are 3 ways in which a corporate card affects personal credit or CIBIL scores

  1. Credit Usage

Most credit card companies account for every credit activity which includes tracking the credit utilisation ratio.

A high balance on a business credit will automatically give a bad impression on the credit report. The simple solution is -  Keep the entire credit utilization ratio for both personal and business cards under 30% (ideally should be 10%).

  1. Tracking Credit History

Card issuers have a simple way of deciding if you deserve to get the credit you have applied for - tracking your credit card history. As soon as they subject your account to a hard credit, it will directly hit your credit score.

  1. Failed Payments in Credit Cycles

Normally account activities of a corporate credit card aren’t reported to credit bureaus.

However, don't be fooled.

If you have failed payments in a credit cycle of, say 30 days, they will report your account and that will be a black dot on your credit score, that will stay intact for as long as 7 years on record!

The Positives- When Will a Business Credit Card Help Your Credit Score?

If you need a low credit utilization rate, using a company credit card is the best way to get there. For instance, if you spent your credit card for business trips that were to be reimbursed by your company, it would then lead to an increase in personal credit limit usage.

Additionally, if your company took more time to reimburse your charges, then you'd be paying some additional interest charges right there. In a chain reaction, the credit bureaus may see this record and tag a high credit utilization rate on your card.


The Negatives - When Will a Business Card Hurt You?

Businessmen who get small business credit cards in their name are risking their credit scores as well. This is because it is most likely that the lender reviewed your credit history before issuing you a card ( also called a hard inquiry).

Conversely, if an employee is using a business credit card, then that also comes with the same risk- lowering of personal credit score of the credit card holder.

If your employee doesn't do the right account management then your score may see a drop as well.

That is where corporate credit cards from neobanks are a much better option. The only reviewing and scanning they do are reported and placed internally in the organization’s credit report.  

What Is the Best Way to Use a Business Credit Card?

If you are using a corporate credit card of a large company, then it won’t make much difference to your credit score, since it is reported officially under the business name itself.

If it is for a small business credit card on the other hand, as mentioned before your credit score drops if something goes wrong.

Conversely, there may be a boost to your credit score if the business card is used responsibly.

  1. A Watchful Eye on Your Credit Score

We can tell you 100 times to be vigilant and to check your credit score regularly and it still won't be enough.

Checking business credit scores along with personal credit scores should be your topmost priority.  This way you won't be blindsided the next time you apply for a higher line of credit and you crash into delays and rejections. This will also help you stay stress-free when there’s a hard credit pull the next time.  

  1. Pay on Time

Something obvious, something 100% true!

It is okay even if you don't clear your full due amount. Just be sure to clear off the absolute minimum amount first.

But of course, clearing off the entire due will help you boost your civil score and save you from the extra interest fees.

  1. Keep Tabs on Personal Credit Spending

The reverse is also true- Personal credit score can also impact business credit. If you aren't able to maintain a decent credit history on a personal front, how will anyone trust you with a business credit responsibility?

  1. Keep a Low Monthly Balance:

A high CIBIL score requires a low credit utilisation. Low credit utilisation requires a low balance on the credit card.

Pro tip:

So to keep your credit balance low, either avoid using credit cards very often or just make multiple payments in a month.


How to Avoid the Negative Impact of Corporate Cards?

The basics you already know. They are -

  • Pay your bills on time,
  • Avoid carrying any debt at all every month,
  • Review your statement monthly to dispute any unauthorized charges at any point in time

But there is one more option you can give a try - Karbon Credit Card.

Karbon Credit Cards

If you are a Karbon cardholder, you could earn Up to 10 cr credit limits

  • 30-day credit period
  • No fixed deposit

If you aspire to go big and better then a Karbon Booster Card is well suited for you with a 10x credit limit of a standard card. With Karbon Cashback Card you get up to 1% cashback with instant spending after top-up.

Sure, business credit affects your credit score, in one way or another. But few lenders are unbiased when it comes to providing corporate credit limits, unlike Karbon Business. Karbon provides a high credit limit to small and big businesses alike. Karbon’s support team constantly monitors any suspicious activities, higher than permitted credit usage, etc.

So unlike banks, Karbon’s got your back and will always be on the lookout to help you with your credit usage. All you will have to do is keep up with prompt credit payments, utilize credit for business funding rightly, and of course, trust Karbon.  

After all, corporate neobanks providing credit cards are the next big thing for businesses in this digital era, wouldn't you agree?


The views expressed in the blogs on this page are solely the opinions of the authors and do not constitute expert advice. While we strive to provide accurate and up-to-date information, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. We disclaim any liability for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

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