Capital One the latest to report business debt to personal credit bureaus
Some people dread going to the dentist. Others dread speaking in public. I dread getting my credit report.
This fear exists not
because I have bad credit, but because I know that as a business owner, I am vulnerable
to the reprisals of credit card companies which, in response to the passage of
the Credit CARD Act, have begun to take out their frustrations on small
businesses. Because credit cards issued
to businesses are not covered under the new act, business owners are sitting
I checked my credit
report a few days ago. Everything was
prefect except one thing: One of my
business creditors, Capital One, began reporting my business credit to all
three personal credit bureaus in October 2009.
In other words, no longer are my personal debt and business debt
separate. My worst nightmare came true.
I completely missed
this policy change. As far as I know—and I make sure I read any correspondence
from credit card companies—no notice was sent out about this change. The credit
card companies are up to their same dirty tricks. Just when you think you have
outsmarted them, they do something new to make life unnecessarily difficult.
As a result of this new
account showing up on my reports, my credit scores dropped almost 100 points
each. Yes. I said 100 points. They have
never been this low! Never.
Normally, I do not
carry a balance on the card, but I recently started to carry a higher balance to
better manage my cash flow. My limit is low, just over $3,000. My balance, $2,000 and change, was too much, increasing
my debt-to-available-income ratio to stratospheric levels. Business is going
well, actually, and I decided to make some capital investments. You would think
this is a good thing. Well, if you are a customer of Capital One, proceed with
caution. A smart move to leverage up like this in business will negatively
affect your personal finances.
I was livid to say
the least, especially since there was no heads up, and my credit history with
the company is pristine. Perhaps I was
still drunk from celebrating the passage of the Credit CARD Act and forgot that
credit cards for businesses are not protected.
After calming down a
few days later, I came to the following conclusion: Stop doing business with
Capital One and tell everyone I know how terrible the company is. It is that
simple. In fact, after my three-day conniption, I realized that once I pay the
card off this month, it will actually help my credit score. So, there is
a bright side to this story after all.
Here are some great related stories:
- Business debts showing up on personal credit reports (NewCreditRules.com)
- Capital One Credit Reporting Causes New Problems for Small Business (CreditBloggers.com)
- Small Business Cards Now Carry Sizeable Risk
(The Wall Street Journal)