Money Rehab with Nicole Lapin - Can a Corporate Card F*#k Up my Credit Score?

Episode Date: September 6, 2021

We’ve talked about best practices around personal credit cards, but what about corporate cards? Nicole sets the record straight! Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Let's be honest, having a corporate card is awesome.

Being able to say, oh, don't worry, I'll expense it feels pretty damn cool. I can't lie. But with great spending power comes great responsibility. And today's money rehabber wants to make sure she tackles that responsibility head on. Here she is. Hi, Nicole. My name is Natalia and I work in marketing in the Austin area. I've had a couple of marketing and PR jobs since graduation. And at each company, I've had a company credit card for travel expenses, photo shoot expenses, and so on. Listening to your podcast, I know it's not the best thing to cancel credit cards. So I want to ask, are the credit cards that I've had through my jobs and the cancellations of those cards once

I've left the job hurting my credit score? This is a great question, Natalia, and I am so happy to hear that you are thinking critically about your credit. That is big, rich bitch energy right there. I have some great news, which I think will apply to you and your situation. If you're working for a corporation or a company that isn't classified as a small business, a company credit card will almost never affect your credit score. You may be thinking, yes, Lapin, that is great news. But why isn't my credit score affected by a corporate card? And how can my personal credit take notes? Ah, Natalia, Natalia, Natalia. If only your personal credit card would abide by the same rules as your corporate card. But that's not

going to happen, unfortunately. But we can still appreciate how our corporate card works. So let's get into it. Let's think about what your credit score really says about you. Your credit score is basically an assessment of how likely you are to pay back debt or how financially trustworthy you are. Your credit card usage contributes to this overall picture of financial trustworthiness. But every time you swipe a company card, you're not promising that you will pay the bill. You're promising that your company will pony up. Therefore, because your company

will be the one footing the bill, any credit card usage is building an argument for how your company pays back debt and not you. This pretty much takes you out of the picture entirely. And so your credit score is unaffected. However, being able to use a corporate card can indirectly help your credit score. I'll give you an example. Say your company has a conference in Vegas and you are one of the lucky employees selected to pack your bags and head to Sin City. If you do not have a corporate card, you would have to throw down your personal card for airfare, hotels, Ubers, Lyfts, meals, everything, and then ask your

company to reimburse you. But when it comes to your credit card, what happens in Vegas doesn't stay in Vegas. Putting all of those charges on your credit card up front could affect your credit score by hurting your utilization rate, even if you're reimbursed later on. Now, let's say you're taking that same trip, but this time you have a corporate card. In this scenario, your utilization score won't be affected because you're not putting any charges on your personal card. So that's one way a corporate card could affect your score. But again, it's very indirect. If you're wondering whether you get a credit alert as soon as you sign

up for a corporate card saying that your credit score has gone down X number of points, nope, that's not going to happen. In the same vein, your personal credit score is not going to benefit or go up from your company paying your corporate bill on time, unfortunately. So Natalia, if your old employers weren't classified as small businesses, your credit score should not have been affected when they closed your credit cards. However, it is a little different if you're working for or were running even a small business. If you're a business owner and you sign up for a business credit account because you are the business, you will likely be personally liable for the credit card payments. So if you're a small business owner, the same rules will apply

when you open a business credit card or a personal credit card. Your credit history will be checked when you apply. If you miss a payment, your personal credit score will get dinged and so on. If you work for a small business, instead of getting a big fancy corporate card, you may simply become an authorized user on your boss's card. In that scenario, it is possible that your credit score may be affected slightly by the business's operations. You probably will not have to have a credit check when you're added to the account, but your credit score could be hurt if there are big credit issues, like if there's a gigantic

balance on the credit card or if payments are missed. On the flip side, your credit score could actually get a little boost if your company, that small business, does pay their bills on time. For today's tip, you can take straight to the bank. Corporate cards, like any other credit cards, have a limit. When you get a corporate card, make sure you ask your company what your spending limit is. If we go back to our Vegas example, you don't want to check into your hotel at 2 a.m. after a super long flight only to have your card rejected because you spent your whole credit limit on the airfare. The more you know about your corporate card, the easier it will be to make smart credit decisions. Money Rehab is a production of iHeartMedia.

I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production and development work. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all. Money, money, money, money, money, money, money.