Dear Your Business Credit,
I recently checked my credit report, and my employer made me an authorized user on his business credit card account.
I’m uncomfortable with this only because it shows up now that I have $9,000 in debt. They have had perfect payment history for many years but high credit utilization.
Is this hurting my credit or helping? If hurting, what can I do to have this removed? – Joseph
Business credit cards vary in how they report debt to credit bureaus.
Generally, they report it when an account becomes delinquent, but they vary on whether they report it when the account is current.
Given that this card does seem to be reporting to credit bureaus and you are uncomfortable with having the $9,000 in debt
appear on your credit report, I would recommend asking your employer to remove you as an authorized user.
The fact that you took the time to write to us about this suggests that you are worrying about it.
If you have access to another credit card and your company will allow you to submit the receipts for reimbursement that arrangement could work just as well and will allow you to sleep better at night.
When becoming an authorized user helps your credit
As to the other part of your question, it sounds like your employer is very responsible about making payments and it could be helping your credit profile to piggyback on his account.
That is particularly true if you have a very limited credit history because, for instance, you’re a recent graduate and are just getting established financially.
As my colleague Barry Paperno explained in his column “How will removing authorized user affect their credit score?,” authorized user accounts become part of the users’ credit report and scores for as long as they are guests on the account.
If you decided you wanted to be removed, it should not hurt your credit score. The account would disappear from your credit score and reports.
Adding employees as authorized users
In the meantime, as an authorized user, you are not responsible for paying the bill – your employer is.
Your letter is a good example of why small-business owners who sign up for corporate cards for their team should explain carefully to employees what an authorized user is and what the implications are.
Corporate credit cards can be a convenient way for employers to keep track of employee spending, but not every employee wants
Once employees learn how corporate cards work, it’s fine to offer the cards, but employers should not pressure anyone to get one.
Of course, if team members do have significant work-related expenses, they may welcome having a corporate card, instead of having to put the expenses on their personal cards and get reimbursed.
Some employers make it more appealing by allowing the employees to keep the rewards points.