Get and Build Business Credit With A Business Charge Card in 6 Steps

Get and Build Business Credit With A Business Charge Card in 6 Steps

Get and Build Business Credit With A Business Charge Card in 6 Steps

  • Business charge cards can help small business owners manage business expenses, and separate business finances from personal finances. 
  • Along with other accounts like vendor accounts, and secured cards, charge cards can help build a strong business credit profile. 
  • Business charge cards are often available to new businesses as well as established ones. 
  • Here’s how to get and use a business charge card to build business credit.

1. Apply for a Business Charge Card Like The Nav Prime Card*

Business charge cards offer business owners the convenience and safety of paying with a card, but without the risk of stretching out debt with minimum payments because the balance must be paid in full.

If the business charge card issuer reports to business credit bureaus, your on-time payments can also help you build good business credit scores.  

The Nav Prime Card

With the Nav Prime Card* transactions are reported as a monthly tradeline, turning everyday transactions into opportunities that can build business credit with regular use. It’s available exclusively to Nav Prime members. No credit check or security deposit is required. 

In addition, Nav Prime offers Detailed Credit Reports and credit scores, monthly tradeline reporting, along with alerts and insights. It also includes tools to help improve your business financial health so you can access the best financing options for your business when you need it.

The Nav Prime Card is not available in CA, NV, ND, SD.

2. Use the Business Charge Card for All Allowable Business Expenses

Once you get a business charge card or credit card, you can use it to pay for any business expenses your business incurs with companies or vendors that accept credit or debit cards. This helps you track business purchases for tax purposes. 

Charge cards are also covered by the federal law that limits liability to $50 if the card is lost or stolen and used fraudulently.  

If you operate your business as a corporation or LLC, it’s especially vital to use a business card of some type. Mingling personal finances with business finances can jeopardize the legal protections your business entity offers. 

3. Pay the Balance on Your Business Charge Card in Full and on Time

A charge card requires payment in full. These cards may require you to pay in full daily, weekly or monthly. You may need to link your business bank account for these payments. 

Regardless, make sure you don’t charge more than you can afford to pay off in full. Since there is no option to make minimum payments, monitoring your spending can help you avoid debt and late payments. 

On-time payments are the single most important factor in business credit score calculations. Getting accounts that report to business credit, and then paying them on time is the most important thing you can do to establish business credit. 

4. Make Sure Your Business Charge Card Reports to Business Credit Bureaus

Just as accounts that report to consumer credit bureaus can help you build strong personal credit, accounts that report to business credit bureaus can help your business build strong business credit scores. But not all small business loans or credit cards are reported, so make sure to check with the lender or issuer before you apply. 

It’s also common for some small business lenders or credit card issuers to report payments to some business credit bureaus, but not others. And some may report negative information to credit bureaus, but not positive information. 

Ideally, you want to choose a business charge card or credit card that reports to multiple business credit bureaus, and that reports positive information as well as negative information. 

Nav Prime membership payments and Nav Prime Card repayments automatically sent as two tradelines to all three credit bureaus.

Customers who used Nav’s Detailed Credit Reports with tradeline reporting saw an increased business credit scores up to 50% in the first 3 months.**

5. Evaluate Business Charge Cards Offers

When choosing a charge card, you’ll want to consider factors such as:

Costs: Since these cards require payment in full, interest rates generally don’t apply. (A few charge cards allow you to pay for certain types of purchases over time, usually for a fee.) Instead, costs to consider include annual fee, foreign transaction fees—if you make purchases outside the US—and other fees.

Perks: Some charge cards may offer rewards programs such as travel rewards, or cash back. Others may offer benefits such as extended warranties, purchase protection, airport lounge access, etc. Understand that the best business reward cards may require good or excellent credit, and charge cards with lots of these perks often charge higher annual fees. 

Credit building. If you’re getting a business card to establish credit in the name of your business, choose a card that reports payment activity to major business credit reporting agencies. 

Qualifications. Most card issuers will evaluate creditworthiness, along with the ability of the applicant to repay any debt incurred. For business credit cards, that often means the issuer will check personal credit scores and will require sufficient household income. 

With charge cards, it’s harder for cardholders to incur long-term debt since the balance must be paid in full either daily, weekly or monthly. Still, there may be a credit check and the issuer may require the business owner to link their business checking account to repay amounts charged. 

Your type of business can also affect which cards you can get. Many of the best small business credit cards and charge cards are available to sole proprietors, including startups. 

But some card issuers, especially those offering corporate cards, will require the business to operate as a corporation or LLC. (If your business is a sole proprietorship and the application requires rather than requests an Employer Identification Number in addition to a Social Security number, you may want to double check this requirement.)

Liability. It’s also important to understand your responsibility with regard to the charges you make on a business card. Many issuers require a personal guarantee in the event your business defaults. Corporate cards that don’t involve a personal guarantee may require the business to have strong revenues and at least two years in business. 

6. Monitor Your Business Credit Reports to Ensure Your Charge Card Is Reporting

Make a habit of monitoring your business credit reports on a regular basis. This will let you see progress if you are trying to build good credit, or rebuild bad credit. It’s also helpful because business identity theft is a growing problem and monitoring your credit can help you identify suspicious activity. 

With Nav Prime, not only will you get access to Detailed Credit Reports, including both business and personal credit reports from multiple bureaus, you’ll also get tradeline reporting. 

The majority of customers that use Nav tradeline reporting at least a year continue to see positive business credit score changes***

Bonus 1: Obtain Vendor Charge Accounts With Suppliers and Pay Them Off Promptly Each Billing Cycle

Entrepreneurs who want to build their business credit history need more than one credit reference on their business credit reports. 

Another great option is to get credit with your suppliers and vendors, provided those companies report on-time payments to business credit bureaus. With this type of credit, your supplier lets you purchase goods without paying for them up front. If the supplier offers net-30 terms, for example, you have 30 days from the invoice date to pay your balance in full. 

Vendor terms can also help improve cash flow as you have more time to pay for purchases. 

Not all vendor accounts report as a tradeline, however. Sometimes that relationship can still help you get credit if the lender is willing to request verification of your payment history, but it’s not quite as helpful as vendors that report on a regular basis. 

Find easy net-30 vendors here

Bonus 2: Apply for a Secured Business Charge Card and Use It Responsibly to Graduate to an Unsecured Card

There’s yet another path to building business credit with business charge cards or credit cards, and that’s to get a secured credit card. With a secured card, you must place a security deposit with the card issuer, and they can access those funds if you don’t pay back what you’ve charged. 

A business secured charge card or credit card that reports to business credit can be another valuable reference on your business credit reports. However, there are far fewer secured business cards than there are secured personal credit cards. Still, if you’re able to set aside a security deposit to get a card, this can be an option to help build out your credit file. 


Can I Become an Authorized User on a Partner’s or Mentor’s Business Charge Card Account?

One way to build your personal credit history is to get added as an authorized user on someone else’s account. Unfortunately this is not generally a viable strategy with business credit cards and charge cards. 

Instead of authorized user status, many business cards offer free employee cards. While these can be helpful for managing employee expenses, they don’t typically report activity to the employee’s credit reports. That also means you’re not likely to be successful building business credit by seeing if your employer offers corporate charge cards or credit cards. 

Do I Need to Keep Business Charge Card Utilization Low? 

When it comes to building good FICO scores, you’ll often see advice to keep utilization low. Credit utilization compares your balances reported for your credit cards to their credit limits. It’s often recommended to keep utilization below 30% or even less, to help maintain good credit scores. 

Charge cards, and business charge cards in particular, are a bit different. Charge cards may not have a preset spending limit, which means there is no credit limit against which the balance can be compared. And with business charge cards, it’s very common for issuers not to report a credit limit. 

*Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A. or Thread Bank, and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. FDIC insurance is available for your funds on deposit, up to $250,000 through Blue Ridge Bank, N.A. or Thread Bank, Members FDIC. See Cardholder Terms for additional details.

**Based on aggregate data tracking Experian® Intelliscore Plus business credit scores after three months of having Nav tradeline reporting. Results will vary. Scores are calculated from many variables; some users may not see improved scores.

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