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Personal Liability And Business Credit Cards
Author : Liz Roberts
Copyright (c) 2010 Liz Roberts
In order to get you started with using your business credit cards, there are certain documents you will need to sign. One of these is called A Personal Liability Agreement.
If you are an entrepreneur with a credit card for business, are you really aware of this condition? Are you well-aware of your obligations as a card holder? In order to be clear on this issue, let us talk about how personal liability applies to business credit cards.
Personal Liability and Small Business Credit Cards
If you have just started your business and you have not yet established your business's credit history, your potential lender or your credit card company would take your personal credit report into consideration. If your personal credit history qualifies with the card's requirements, chances are your application would be approved. Nevertheless, you'll be subjected to the personal liability statement on your contract.
What is the meaning of a personal liability? Since your personal credit report was used as the basis of your approval, how you use your business credit card will also directly affect your personal credit history. Even if your business and personal credit card expenses belong to two separate accounts, both will still be reflected on your personal credit report.
This means, if you are frequently late in submitting your payments to your card, your own credit score can be badly affected. Remember that late payments can pull down your credit score whether you used your card for business or your personal credit card. If you exceeded your business's credit limit, your credit score will also suffer. It is important to be responsible in managing your obligations to both your personal and business cards.
Is There A Way to Free Yourself From Liability?
Is it possible to get away from your business credit card's personal liability clause? Yes. Bare in mind that the reason why this agreement was executed is because you still don't have a business credit. Nevertheless, as soon as you get approved for a business credit card, it is wise to also sign up your company with a business credit reporting agency such as Dun & Bradstreet or Experian.
By establishing a separate credit history for your business, you can soon be set free from the personal liability connected to your business credit card. Why do you think this is important? Keep in mind that some consumer rights that are applicable to personal cardholders may not apply to owners of business credit cards.
For example, the right to complain about damages with the products you received or the right to dispute unauthorized charges on your account does not necessarily apply to business credit cardholders. Thus, wrong charges on your business card account can instantly affect your personal credit. The reason why business owners are being advised to separate their business credit to their personal credit is to protect their personal credit and eventually free them from further liabilities.
Author's Resource Box
Since 1989, New Horizon Business Services, Inc NHBS, Inc has been providing consumers and business owners with financing. Join our mailing list for
Free Tips on Rebuilding and Repairing Credit
. Click here for the list of
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Article Source:
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Tags: business credit cards, credit cards for business, credit cards
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Submitted : 2010-09-09 Word Count : 1 Popularity: 471 Times Viewed: 34
