A corporate credit card can be a vital tool in financing a business. Creditors assess a company's credit history to determine whether the business is creditworthy. If a business is new and does not have an established credit history, your personal credit history becomes the primary factor in the approval process, and you may be turned down for a corporate credit card due to an unsatisfactory personal credit history.
Business Credit
Like personal credit, business credit information is updated monthly for companies registered with Dun & Bradstreet. Dun & Bradstreet assigns each business a DUNS number used to track its credit information. If you have not established business credit, you can start with a credit account with a retailer that does not require extensive business credit history. Before applying, ensure that the company reports information monthly to Dun & Bradstreet and the major business credit bureaus.
Company Assets
Credit cards can provide access to capital for business owners who are unable to qualify for adequate loans. Credit cards offer flexibility and perks that can be essential in maximizing the resources of your business. However, never finance your business with personal credit cards. Mixing personal and business credit can result in tax penalties. You are required to use your Social Security information to apply for business credit cards while your business is in the start-up phase so that creditors have a reference as to how you manage debt, however.
Application Process
Many business credit card applications offer instant approval when you apply online or by phone. If you are using your Social Security information to secure the card, you have a greater chance of approval if you have a good credit score. Bad credit scores do not always result in rejection, but can cause you to have a higher interest rate and lower your credit limit. If your application for a corporate credit card is rejected, you will receive a letter in the mail detailing the reason for the unapproved application.
Established Business Credit
With established business credit and assets, you can avoid using your personal credit to obtain new financial resources. The length of time you have been in business, annual profits and the presence of existing business capital all add your credit worthiness. If you have more than one business, consider using the business with the most assets and credit history to apply for a credit card to increase your chances of approval. Inquire as to whether you can add another business entity as an authorized user prior to completing your application. This helps you maintain accurate accounting records for tax time.
0 comments:
Post a Comment