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Copyright (c) 2009 Liz Roberts
For a business that has just been started, the business owner's credit history is often the one used to determine credit approval. Thus, if you are applying for a business loan or a business credit card, it's best to check on your credit report first before submitting your application.
Since the approval of your credit card is based upon your personal credit history, it only follows that the responsibility for all future charges that will be made on this account will be upon you. If you have a business a partner and you applied for a card using your personal credit history, you'll be the responsible and not your business partner.
Your Obligations as a Business Credit Card Holder
It is true that a business credit card helps you separate your personal finances from your business account. But if you haven't set up a separate business credit yet, your own credit history will be used. Don't think that your personal credit history will not be affected with the way you handle your business account. In fact, how well use your card and how timely you are with your payments will also be reflected in your personal credit report.
Thus, even if you are timely with your payments to your personal cards and personal loan lenders, if you fail to keep up with your card payments, your personal credit history can still be affected. Your inability to pay your business credit card bills on time can pull down your credit score despite your best efforts in managing your personal accounts.
It is therefore recommended to register your business with a business credit reporting agency such as Dun & Bradstreet or Experian. This way, you can start building a separate credit history for your business right away.
Understanding Your Business Credit Card Issuer's Terms
Another point that you should be aware of is that certain laws that apply to your personal credit card may not apply to your business credit cards at all. For instance, disputing unauthorized charges is your right as a consumer and a credit card holder. But as a business credit card holder, your card issuer may not intervene on your behalf in case you have disputes with your account. Of course, the terms regarding fraud issues will depend on your business credit card issuer and these should be disclosed in the contract.
Clearly, there's more to a getting a business credit card than just signing up for a card. It involves your personal liability for all expenses made on behalf of the business. This personal liability is clearly stipulated in your business credit card agreement when you signed up for the deal. So before submitting your business credit card application, study the fine print carefully and make sure that you do agree with your card issuer's conditions. If there are statements or phrases in the agreement that seems vague or unclear, call your business credit card issuer and ask for an explanation.
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