Seven Business Credit Card Tips

We consistently evangelize for keeping business and personal credit separate and we practice what we preach, helping small businesses establish a strong line of business credit to protect personal assets and decrease liability exposure. If you’re in the early stages of building business credit, a business credit card can be a tremendous help. The seven steps below will set — and keep — you on the right path.

Open a Business Credit Card

Your first tip is the most obvious one: if your small business isn’t using a business credit card, it should be. To begin with, a record of on-time payments will show your business’s ability to meet its financial obligations on time. That, in turn, can open up new avenues of financing — including working capital loans, SBA loans, and more — as your credit rating finds its footing. Your small business credit card can also be a useful backstop for emergencies.

Start With the Essentials

The approval process for a business credit card is somewhat more complex than it would be for a personal credit card. To improve your odds and your line of credit, ensure that your affairs are in order. We addressed this in more depth in our recent post, Top Five Tips for Establishing Business Credit.

Choose Wisely

As with consumer credit cards, the market for business credit cards is fiercely competitive. One result of this is that credit card companies offer a wide range of perks to entice signups and retain business. Choose perks that are appropriate for your business, since the frequent flyer miles that are a welcome incentive to your consultant friend may not be a boon to your florist or auto repair shop.

It’s also important to read the fine print so you know the exceptions for those perks, or the “real” rate once the teaser rate expires. And of course, always be ready to negotiate a better rate or a higher line of credit where needed — re-evaluate on an annual basis.

Know What to Charge

Your business credit card still has its place even once you’ve established loans and lines of credit. After all, it’s a great way to keep that other pool of money intact while taking care of minor monthly expenses. As FitSmallBusiness suggests, items like your business phone, office supplies, continuing education, and travel expenses can all be put on the card.

Higher Credit Limits Help

The ratio of debt to available credit has an outsized impact on your business credit score just as it would on your personal credit. A higher limit lets you make larger purchases when needed while also keeping that ratio low. Just one caveat: allowing a balance to accumulate and carry over month-to-month will cause your credit to take a hit.

Check the Reports, and Reporting

Here, we come full circle. Your business credit card should report to — and only to — the business credit bureaus. As mentioned earlier, it’s very important that your business and personal credit do not mingle, so your business credit card ought not to report to the consumer credit bureaus. It also goes without saying that you should engage in credit monitoring for your business accounts the same as you do for your personal credit.

Find an Ally

Navigating business financing can be daunting. That’s especially true if you’re new in business, or if you’re trying to repair or rebuild credit that’s taken a few hits in recent years. Alliant Business Systems can help put you back on the right track with credit repair, credit monitoring, and a host of other services. Contact us today for a consultation and see how we can help you.