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Using your company credit card may help or hurt your personal credit score—here's how

Before you charge another business expense onto your company card, know that it could impact your own credit history. CNBC Select takes a look at how to find out whether your company card is hurting your score.

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The Capital One Spark Cash for Business is no longer available to new applicants; however, Capital One has launched 3 new business cards for small business owners. Click here to learn more.

If you use a company credit card as either an employee or small business owner, the way you use it could affect your personal credit score.

The degree of its impact depends largely on what type of card it is and how you use it. The largest factors are whether you are the primary account holder, an authorized user on a business card or an employee in a large company with one of its corporate cards.

Below, CNBC Select breaks down how to look for a company card on your credit report, plus how these different scenarios can affect your personal credit score.

How to check if a company card is impacting your credit score

If you're unsure whether or not your company credit card affects your credit score, pull your credit report to see if it shows up.

"Now is a great time to do this since the credit reporting agencies are offering free weekly credit reports," Roger Ma, a certified financial planner at lifelaidout® and author of "Work Your Money, Not Your Life," tells CNBC Select. Normally, you are only able to get one free credit report per agency per year.

To spot whether or not your company card shows up on your personal credit report, Danielle Harrison, a certified financial planner in Columbia, Missouri, suggests looking to see if an inquiry was made for opening the card or if the card is listed as being in your name.

"If the answer is 'no' to these questions, then the corporate credit card will not impact your credit score," Harrison says.

When using a company card hurts your credit score

There are a few scenarios in which using a company card can have a direct impact on your personal credit score, which many people don't realize.

Business owners who take out small business credit cards in their name could be putting their own credit score at risk since the lender most likely reviewed your history and score before issuing you this line of credit for your business.

Because of this, "whatever happens on that credit card will be reported to the credit bureaus," Harrison says. A small business credit card acts the same as a personal credit card in this way.

For example, if you are a small business owner who likes earning cash back with the Capital One® Spark® Cash for Business but one busy month you miss a bill payment, this shows up on your personal credit report. Or if you charged work travel expenses on your Ink Business Preferred® Credit Card and need to carry a balance, it's your personal credit that will reflect the higher credit utilization ratio.

The same goes for employees of a company who have been added as an authorized user on their employer's small business credit card. The impact on your credit is similar to being an authorized user on someone else's personal credit card.

While you won't be liable for making the credit card payments as an authorized user, your personal credit could still be affected by the account holder's actions. This means that if your employer doesn't manage the account responsibly, has a poor repayment history or carries a large balance month to month, you could potentially see a ding in your score.

However, the damage will likely be minimal. According to the credit bureau Experian, "Some credit reporting agencies, including Experian, do not include negative payment history in an authorized user's credit report. But others may."

If you are a corporate credit cardholder, your credit will likely not be affected. The issuer may check your credit before your company gives you a card, but the activity on the card (the outstanding balance and payments) is reported on the organization's credit report.

"For those working for large employers with corporate credit cards, it is uncommon that the credit card will affect your credit, but it is a possibility," Harrison adds.

When using a company card helps your credit score

Using a company credit card to charge business expenses can indirectly help your personal credit score by helping you maintain a low credit utilization rate.

Shon Anderson, a certified financial planner and president at Anderson Financial Strategies, gives an example to show how.

Imagine you were taking a business trip and had to charge expenses, such as airline flights, hotels, cabs and meals, onto a credit card. If you had to put these business expenses onto your personal credit card and later get reimbursed by your company, this could cause a steep increase in how much of your personal credit limit you use.

And depending on how long it took for your company to repay you, those charges could linger long enough to incur interest charges.

"The credit bureaus would see those extra charges and report a higher credit utilization rate, which can negatively impact your score," Anderson tells CNBC Select. Experts typically recommend keeping your utilization rate, or your debt-to-credit ratio, below 30%. (Some even say below 10% for the best credit score.)

Anderson notes one caveat: If you have plenty of unutilized credit and don't have any significant purchases coming up, or you don't plan on applying for a loan any time soon, you may be able to handle a slight temporary reduction in your score. If that's the case, putting these business expenses on your personal credit card can help you more quickly earn rewards, such as airline miles or cash back.

So if you are a Chase Sapphire Reserve® cardholder, you could earn 10X total points on Lyft rides through March 2025, 3X points on travel worldwide (immediately after earning your $300 annual travel credit), 5X total points on flights and 10X total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® (immediately after the first $300 is spent on travel purchases annually); 3X points on dining at restaurants worldwide and 1X point per $1 on all other purchases.

Information about the Capital One® Spark® Cash for Business has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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