Can you be personally liable for a corporate credit card you get from your employer? Can the business card you use as an employee of the company for which you work affect your credit rating? I dug into those questions recently after getting two emails from women who found themselves dealing with the spillover when their employers didn’t pay charges on the corporate cards they were issued.
The first email came from a woman who had relocated to another state to take a sales position. Her supervisor told her to charge her relocation expenses to the corporate card the company gave her. But when the job didn’t pan out, the company did not pay the bill and it now appears on her credit reports as a charge-off of just over $5000. About to buy a home, she was worried she would have to fork over the money to pay off the bill in order to get a mortgage.
The other woman who emailed me has been a contract employee for a firm that is now having financial problems. She was informed by the manager of that firm to stop using the corporate card he had given her for business expenses because he is no longer able to pay the bills. Her cell phone has been ringing off the hook with calls from the creditor. “Will this hurt my credit reports?” she asked.
To get to the bottom of this story, I talked with consumer law attorneys and contacted the major card issuers themselves. In large part, what happens depends on which type of corporate card you carry. It’s vital that you know the difference.
Two Types of Cards
There are generally two types of corporate cards. With the vast majority, the employee gets a card from his or her employer, the bill goes to the employer, and the employer is completely responsible for payment. In those cases, the employee is an authorized user and is not responsible to the card company for payment.
The other type of card, however, does carry individual liability. The employee fills out an application, gets the bills, gets reimbursed by his or her employer, then pays the card issuer. This type of card may affect the employee’s credit scores, since activity can appear on their personal credit reports.
Only one issuer, Capital One, stated it does not issue corporate cards that allow for personal liability on the part of the employee. “Employees are not liable for charges. They are not reported to bureaus and not responsible for the debt. The primary (accountholder) and business are jointly liable for the debt, not the employees,” said spokesperson Pam Girardo by email.
The other issuers I queried—American Express, Bank of America, Chase and Citibank—all said they offered cards with and without individual employee liability. Here’s what they told me…
[Resource: Get your free Credit Report Card]