In the formulas that determine a credit score, how long you have had credit may seem to be a somewhat minor factor. That statement certainly sounds true for the FICO score, which counts this portion as [...]
What is a commercial card?
A commercial card is a credit card issued by employers for their employees to use to make purchases on behalf of their company. Frequently issued as co-branded cards with retailers, commercial cards help businesses manage their expenses by collecting all charges made by employees into a single place.
When employees have to make purchases on behalf of their employer, they can use a commercial card so they’re not spending their own money. Commercial cards are frequently used by companies to keep track of such expenses in order to more closely analyze the effects on the company budget.
Commercial cards are credit cards, issued through a financial institution. They are often co-branded with another organization that works closely with other businesses, such as construction supplies retailers and gas companies. This kind of partnership allows companies to earn rewards and discounts for purchases they were already going to make at the co-branded company.
Commercial cards come in different variations to meet the needs of the respective business:
Corporate credit card: Corporate credit cards are sometimes issued to employees of large companies. They have less emphasis on rewards and more on the analytic side of business expenses. Some financial institutions may require users of a company credit card to apply using their own Social Security number and credit history, which could result in a hard inquiry that temporarily lowers the user’s credit score.
Small-business credit cards: Made for companies with lower revenue, small-business credit cards have lower fees and more emphasis on rewards. They also require a company guarantor that can cover the credit balance in the case of delinquency.
In both cases, employees are usually required to submit their receipts to receive reimbursement for a charge. Otherwise, the employee could be held liable for the charge, and the becoming delinquent on the charge could hurt her credit score.
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Commercial card example
Citigroup offers commercial credit cards co-branded with The Home Depot. One, a revolving charge card, lets employees make purchases on the company account that the company can pay off in installments each month. The other works more like a typical credit card that must be paid in full each month. They both offer discounts on fuel and itemized statements.