What You Should Do With a New Small Business Credit Card

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Being approved for a new small business credit card is a pretty exciting ordeal.  It is a great step in growing your business and moving onto the next step as it relates to a solid corporate credit foundation.  Now all you need to do is understand how to use your new business credit card so it benefits you in every way possible.

Having a business credit card is a great start for building a strong corporate credit foundation

Hopefully before you applied for this business credit card you did a bit of research and found out whether or not the bank or lender that issued you the card reports your positive payments to the business credit reporting agencies and not the personal credit reporting agencies.  Separating your personal credit from your business credit must be the goal when it comes to operating your business.  This strategy will also protect you, the business owner, from any harm that may fall upon the business.

Make sure that if you do apply for a business credit card that the bank reports your positive payments to the business credit reporting agencies

Business credit cards that report to the business credit reporting agencies allows for your business to be placed on the lender heat map.  It will show future lenders and banks that you have taken the correct step in creating a solid corporate credit foundation for your business.  This will allow to apply for true unsecured business financing down the road.

There is a strategy on how to use your new business credit card so it gives you a positive business or personal credit score

Once you have been approved for a new business credit card, there are a few strategies to make sure that your business credit score reflects your new business credit card the best way possible.  Business credit reporting agencies will report three different numbers on your business and personal credit report. 

 - Your business credit card limit

 - Your business credit current balance

 - Your business credit card high balance

Based on these three numbers, the credit reporting agencies will decide how it affects your credit report.  What you want to do in the beginning is to run up the business credit card to it's max.  Now be careful because many of you will have huge limits on your credit card so running it up could be dangerous.  If you have a huge limit try to get your balance up at least to a reasonable amount.  Keep the balance at a high balance for one pay period so the credit reporting agencies can see that you have a high balance.  Once you have gone through one pay period with a high balance try to either pay the entire card off so it's at zero balance or pay it down to where the balance is at least under 30% of the total business credit card limit.

So now that you have gone through a few payment periods, the credit reporting agencies will see that you have had a high balance and at the same time you have paid that balance down to a reasonable amount and you have kept it there each month.  This proves to the credit reporting agencies that you are a responsible credit card holder.

Keep in mind that only small day-to-day expenses should be put on a business credit card.

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