Dear Credit Card Adviser,
My wife was recently and unexpectedly part of a mass layoff from her employer, a Fortune 100 company. While employed, she occasionally traveled for work and would purchase her flight, meals, hotel, etc. using her American Express corporate card (that is in both her name and her company's name). She never incurred any personal expenses using that card. She was laid off within four days of her last work travel, so she didn't complete or submit an expense report before the layoff. Her employer closed her AmEx account after the layoff, but she recently discovered that there is still a $1,200 unpaid balance on the account and the account is now four days late. She has let the former employer know about the late notice, but they just asked her to manually submit an expense report (which she did) and mail it to the former employer at her own expense. Our big concern: Is her credit in jeopardy now that the payment deadline has passed (or, even worse, if the employer never submits the payment)?
For her credit score to be in "jeopardy" the late payment has to show up on her credit report. The credit score is a numerical measure of the information in her credit report.
Corporate cards don't always appear on the employee's credit report. It depends on how the corporate card account was set up. When the employee -- as opposed to the company -- is personally liable for the expenses, the account might appear on the person's credit report. The employee might be liable for the charges even if the company submits payments to the issuer.
If the account is on her credit report, then delinquencies on the account could affect her score.
"If the account is in your credit history, then a late payment is a late payment and there's no distinction, whether it's a corporate card or not a corporate card. It's a card reported in your name," says Maxine Sweet, vice president of public education at Experian, one of the three major credit-reporting agencies.
If the account isn't listed on her credit report, then a delinquency is unlikely to surface. "A delinquency has to be against an account that's in your name," says Steve Ely, president of North American Personal Solutions for Equifax, another major credit-reporting agency.
In cases where the account isn't reported but the employee mistreats the account by committing fraud or never submitting an expense report, then the consumer might see a collection notice on his or her credit file, according to Ely.
As for American Express, company spokeswoman Janet Lee told me that in general, the company doesn't report corporate card accounts for an individual "as long as the cardmember fulfills their personal responsibilities in managing their corporate card account." Those responsibilities include filing expense reports on time, which your wife didn't do since she was laid off.
Lee said an account only four days late wouldn't get reported, but refused to confirm whether a past due corporate American Express account could eventually wind up on a person's credit report.
Bottom line, if she wants peace of mind, she should check her credit report. She can request a free copy from AnnualCreditReport.com. Federal law entitles consumers to a free copy from each of the three major credit reporting agencies once every 12 months.
If the account isn't listed, her score seems unlikely to take a hit from the late payment, especially since she has taken steps to reconcile the outstanding balance. Either way, if I were her I'd keep tabs on the account until the bill is paid in full and then check my credit report again to ensure that my credit record wasn't blemished.
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