Is a Fleet Card the Key to Building Business Credit?

April 18, 2020

We’ve all seen volatility in fuel and maintenance costs. In times of cost spikes, you might find yourself putting a higher dollar amount on your business credit card just to keep your fleet moving. Often, though, this is only a temporary solution, and you eventually hit a bump in the road -- your credit limit.

One possible solution to that problem is to make a call to your bank to ask for a larger line of credit. But banks are not always generous with small business owners.

A fleet card, however, can pave the way to help you build business credit, while at the same time keeping tanks full and vehicles running smoothly.

Advantages of a business fleet card

Credit cards are an important part of managing a business. But a new business owner or manager might find it difficult to get business credit — even if they personally have an excellent track record — because the business itself has little or no credit history.

John Ulzheimer, a nationally recognized credit expert, explains why: “Consumer credit cards are not reported to commercial credit reporting agencies, but rather are reported to consumer credit reporting agencies like Equifax, Experian, and Trans Union,” he says. If you rely on personal credit to get you through, you’re missing an opportunity to build a report that will get you that desirable business line of credit.

A fleet card can be an excellent tool for business owners who are just starting out. The good news is that it’s generally easier to get approved for a fleet card than for a business loan or even a standard business credit card. Once you secure the fleet card, all that remains is to practice responsible use of credit (ie, pay on time) and you’ll be well on your way, since your credit management is reported as commercial.

That means a fleet card might offer a good way to start the journey toward building, or rebuilding, business credit.

On the road to new company credit

If you think a business gas card might be right for you, here are steps you should consider:

1. Choose the fleet card that works best for your situation.

Factors to consider when choosing a fleet card include: type of fuel your fleet uses, the number of vehicles in your fleet, the geographic travel patterns of your fleet, and the type of business you run. Also consider:

• Where can the card can be used? Some cards can only be used in certain geographic regions or at specific fueling stations or repair shops. Make sure the card is a good fit for your location, travel patterns, and purchasing needs.
• What types of purchases can you can make? Some cards allow only fuel purchases, while others offer the ability to pay for vehicle maintenance and other vehicle-related expenses. A card with more options may offer you more flexibility to use credit in the way that works best for your fleet.
• What tracking and reporting tools does the card offer? One of the biggest advantages of a fleet card is the ability to monitor and control purchases for fleets. For example, a fleet card might offer the ability to lock or limit spending based on certain criteria, receive alerts, assign a card to a specific driver or vehicle, track activity, and view reports online.
• What discounts does the card provide? Some cards offer volume discounts on fuel purchases. Tally up how much you typically spend, compare it to the deal the card offers, and calculate how much the card can save your business.

2. Start using the card to keep your fleet running.

Provide fleet cards to authorized employees and train them on what purchases they may make on the card. Make sure to take advantage of tracking and reporting offered by your card. These features allow you to monitor which purchases are made by which employees and to save money by reducing the risk of losses due to unauthorized purchases.

3. Pay your bill on time every month to build credit.

Just as you would with your personal credit cards, it’s key to pay your fleet card bills on time every time to build good credit. Set up alerts and automated payments if necessary to help you manage your fleet card and build new business credit along the way.

“The best way to get different types of business credit in the future is to exhibit responsible management of your current business accounts,” Ulzheimer says. A well-managed fleet card can certainly be a first step towards future extensions of business credit.

If you still have additional questions, you can find answers in our frequently asked questions section or speak to a fleet specialist via email or by phone at 1-800-633-3271.