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How Will Corporate Cards Affect My Credit?

Aug 28, 2006 | | Comments Comments Off

Dear Liz: I recently began working as an executive at a large entertainment corporation that pays for business lunches, cellphone bills and similar expenses.

 

The company has been hassling me to sign up for one of its corporate cards to make the reimbursement process easier for all involved. The company would pay the bill directly, eliminating the need for me to submit receipts and be reimbursed.

 

My understanding is that virtually every executive here carries such a card.

 

I already have two credit cards with sufficiently high limits for any business expenses I’m likely to incur. My credit score is outstanding for someone my age (I’m 27), in part because I have maintained both cards with very low balances for close to a decade without ever missing a payment.

 

I work in an industry in which frequent job changes are common and sometimes even necessary to advance professionally. I am concerned that my credit rating will suffer if I open and close new corporate credit card accounts every few years. What are your thoughts on this issue?

 

Answer: If your credit scores and credit limits are high, you don’t need to worry too much about opening or closing an account every few years.

 

What tends to really ding your score is opening or closing a bunch of accounts in a few weeks or months, or closing your highest-limit card or the one you’ve had the longest.

 

The bigger issue with corporate cards is losing control over when the bill gets paid.

 

Even though the card is supposedly a “corporate” account, its history will probably show up on your personal credit reports. And even a single late payment can devastate your credit score, the three-digit number lenders use to gauge your creditworthiness.

 

If you succumb to the company’s pressure, keep track of the account to make sure payments are being made by the due date each month. You typically can check a card’s balance and payment status by phone and online.

 

Follow up when you leave the company to make sure the account is paid off and closed.

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Categories : Credit Cards, Q&A