Do fuel cards help build business credit?

Building business credit is an essential part of effective management practices. But for some companies, building business credit may prove challenging. Fuel cards are a great way to build business credit for a business looking to build its credit. Read on to find out how you can use fuel cards to help build business credit securely and effectively.   

And when you’re finished, check out the other articles in our ‘Credit requirements for trucker fuel cards’ series:

• Fuel card vs. credit card: Which one is best?
• Do fuel cards help build business credit?
• How to secure a no credit check fuel card for your trucking business
• Best trucking business fuel cards with no credit check

What is a business fuel card?

A business fuel card or fleet fuel card works as a line of credit businesses use to pay for gasoline and other automobile-related expenses such as insurance or maintenance. Fuel cards can be secured or unsecured credit lines that offer a number of benefits and discounts.

Business fuel cards are generally net 30, meaning fuel card service providers report timely payments monthly to business credit bureaus. As a result, business fuel cards are a highly effective way companies can build their business credit. 

In general, it’s easier for businesses to qualify for fuel cards than traditional credit cards. Some business fuel card providers may require a deposit to secure a fuel card until you establish your creditworthiness.

What credit score is needed for a fuel card?

Most fuel card service providers require customers to have fair credit. Fair credit is at least a 580 FICO score. A FICO score above 640 on business credit reports ensures the best chances of getting approved for practically any card.

Do fuel cards report to credit bureaus?

Yes, fuel cards report to business credit bureaus usually on a net-30 basis. By “net 30,” we mean they report timely payments after 30 days. You can typically expect to see on-time payments in your credit score within 60 days of opening net-30 accounts.

Are fuel cards safer than credit cards?

On the whole, fuel cards are much safer than traditional credit cards for fleet fuel purchases. Fuel cards are the best option for fleet owners since fuel cards have safety features like unique driver IDs. This feature means that a special code must be entered at the pump in order to purchase fuel. The increased safety features allow fleet owners to reduce fuel card fraud and track spending effectively.

Prepaid fuel cards that help build credit

Having trouble getting approved for a fuel credit card? Look for a prepaid fuel card that reports to the credit bureaus and helps you build credit. Typically, you’re only required to deposit funds onto the card. Each transaction you make helps to build your credit score, and gets you one step closer to credit card acceptance. Additionally, some of the best prepaid fuel cards give you access to their discount network and premium security features.

How to build credit with a business fuel card

A business fuel card is a great way to build business credit since fuel card issuers report on-time payments to the three credit bureaus. Fuel cards allow businesses with bad or no credit to strengthen their credit reports.

Pick the fuel card that meets your needs

Choosing the best fleet gas card for your business largely depends on your specific needs. There are several factors you must consider when picking a fuel card:

• Discounts: Fuel cards generally offer discounts. So, it’s worth comparing which cards offer the best discounts.
• Coverage: It’s crucial to know where your card will be accepted. This factor is key as not all gas stations accept the same fuel cards. Some fleet gas cards are tied to specific gas stations. This condition means that your drivers can only fill up at specific gas stations. Consequently, this situation may become inconvenient for your business operations.
• Benefits: It’s worth considering what additional benefits you can get from a fleet gas card. For instance, you may get reward points, discounts at restaurants and supermarkets, or cash-back options.
• Reporting: Proper reporting is a big deal. You must ensure that your chosen fleet fuel card offers comprehensive reporting on who uses the fuel card and when and where it is used. Reporting is key, particularly for tax purposes.
• Fleet size: It’s worth noting that some fuel cards may have spending minimums or may only serve specific fleet sizes. Spending minimums are highly important because these types of cards may not be suitable for smaller fleets. 
• Security: Most fuel cards come with standard security measures such as driver ID, vehicle information (VIN and/or plates), and odometer readings. Other cards report vehicle and gas station location. These features are crucial to avoid misuse or fraud.

Use the fuel card at the pump

Once your fuel card application is approved, you may need to wait between 24 to 48 hours for your card to be operational. When your card is working, you can begin filling up immediately. 

Here’s how you can use your fuel card:

• Visit a participating gas station. It’s important that you fill up at participating gas stations; otherwise, your business fuel card may not work.
• Though not always necessary, telling the cashier or gas station attendant you’ll be paying with a fuel card is a good idea.
• Fill up. Please bear in mind you may have a specific number of gallons or dollar limit when you fill up.
• Show your fuel card to the cashier or gas station attendant.
• You’ll be prompted to enter your code or ID number in the POS terminal.
• You may need to provide ID (like a driver’s license) to verify your identity.
• You may also need to provide additional information, such as mileage.
• The cashier will then process the payment.
• You will most likely need to authorize the transaction by signature.

The process above applies to all drivers, including owner operators.

If you’re using an automated system, here’s what you can expect:

• You’ll need to swipe your fuel card first. 
• The machine will ask you to enter your PIN, code, or ID number.
• You will most likely need to enter additional information, such as the vehicle’s license plate number, mileage, or VIN. 
• You’ll need to select the fuel or dollar amount.
• The machine will process the transaction and release the fuel.
• Once you’ve finished filling up, you’ll be prompted to confirm the transaction.

As you can see, using a business fuel card is a great way to save time, money, and effort while keeping effective controls on your fuel expenditures.

Pay your bills on time

When using a fleet fuel card to build business credit, it’s essential that you pay bills from your business bank account on time. Paying your bills on time is crucial to maintaining or rebuilding your business credit score. 

Here’s why:

When you pay your debts to vendors or suppliers on time, or early if possible, the fuel card service provider reports your payments to the credit bureaus. The bureaus process your payments and display them on your report. Gradually, your credit score will begin to climb.

A good rule of thumb is to pay invoices one or two days before your payment deadline. Please remember that if you pay on the last day, your payment may not get reported on time. As a result, your payment may be categorized as late even though you paid on time. 

You can build your credit from scratch or improve it by ensuring you keep consistent and timely payments.

Don’t miss a payment

It’s essential that you avoid late or missing payments on your business fuel card. Late or missing payments are a liability to your credit score. For instance, a late payment past 30 days due can knock as much as 100 points off your credit score.

It’s worth noting that you may catch a break with lenders if you miss your payment deadline by a day or two. Fuel card service providers may not report the payment as late. However, there’s no need to take a chance. Whenever possible, try your best to pay one or two days in advance. If you do miss your payment deadline, try to make your payment as soon as possible. Letting a payment go past 30 days due is a surefire way to send your business credit score tumbling. 

If you’re planning to use a fleet fuel card to build your business credit, you cannot afford having missed deadlines on your payment history.

How to associate fuel card transactions with your EIN

Associating fuel card transactions with an Employer Identification Number (EIN) is essential for businesses to streamline accounting, enhance security, and simplify reporting and tax-related processes. Here are some strategies and steps to ensure that fuel card transactions are correctly linked to an EIN:

Use fuel card providers with EIN association features

Many fuel card providers offer corporate cards specifically designed to link transactions with a company’s EIN rather than individual social security numbers. When setting up the account, ensure the card application includes the company’s EIN. This associates the card usage and transaction history with the business instead of individual employees.

Assign unique employee or vehicle identifiers

Set up each card with identifiers, like employee or vehicle ID numbers. Fuel card providers can often track these against the EIN. This empowers you to monitor usage at the employee or vehicle level, which then aggregates under the company’s EIN for simplified record-keeping.

Integrate fuel card data with accounting software

Some accounting software systems allow direct integration with fuel card providers. By linking fuel cards to the business’s accounting software, you can automatically associate transactions with the business EIN. Integrations facilitate seamless reconciliation and make it easier to categorize expenses under the EIN for accounting and tax purposes.

Create a fuel card policy with clear tracking guidelines

Develop a company fuel card policy outlining how transactions should be logged, categorized, and reported. This is particularly useful if multiple employees are authorized to use the card. Ensure that all transactions are tracked in a way that associates them with the EIN, either through centralized logging or digital reporting systems that sync to the EIN.

Work with fuel card providers on reporting formats

Request customized transaction reports from fuel card providers that can be sorted or filtered by EIN. This can streamline expense tracking, making it easier to compile records for tax filing or audits. Look for fuel card providers who offer robust online portals, detailed transaction logs, and downloadable reports.

Implement GPS or telematics for fleet tracking

For companies with large fleets, adding GPS or telematics solutions can track fuel usage at the vehicle level. Some telematics providers can integrate with fuel card transactions and associate all data with the business EIN, helping consolidate expenses and usage for compliance and reporting.

Link with a business bank account associated with the EIN

Ensure that fuel cards are linked to a bank account registered under the business EIN. This reinforces the association between the EIN and fuel expenses and provides an extra layer of separation from personal or non-business-related transactions.

Periodically audit and reconcile

Conduct regular audits of fuel card transactions to ensure they align with the EIN-associated expenses. This step is crucial for maintaining compliance, preventing fraud, and preparing accurate tax filings.

By following these practices, you can maintain an accurate and organized financial record for fuel expenses that’s directly linked to the EIN. This association is essential for tax deduction purposes, fraud prevention, and compliance, especially when audited.

Fuel card vs. credit card for building credit

When looking to build business credit, is it better to use a fuel card or a standard credit card?

Generally speaking, fleet fuel cards and credit cards can help you build business credit. However, a fleet gas card is generally a better option for fleet owners or truckers. Let’s take a closer look:

Business fuel card

Pros:

• Easier to get approved even with a low business credit score
• Robust security measures
• Benefits and rewards designed specifically for fleet owners and truckers
• Comprehensive controls help track spending
• Reporting to credit bureaus

Cons:

• Limited coverage in businesses such as supermarkets, restaurants, and shops
• Low credit limits
• May need to provide a security deposit as collateral

Business credit card

Pros: 

• Higher credit limits
• Can be used in a wide number of locations
• Generally offer better rewards across several products and businesses
• Accepted virtually everywhere

Cons:

• Credit cards don’t offer enhanced security measures
• No comprehensive reporting on fuel expenses
• Require a solid credit score to qualify
• May need to pay a security deposit
• Might be more vulnerable to fraud
• May not report to the credit bureaus

Verdict

Business fuel cards are a better choice for fleet owners and truckers. Fuel cards provide features designed to help small and large fleets. Plus, business fuel cards are great for businesses looking to build credit.

In contrast, fleet owners and truckers need to have a good business credit score to qualify for traditional credit cards. The lack of specific safety features and reporting is a major downside to credit cards for small business owners. Therefore, traditional credit cards are not the best way to build business credit, especially if you’re rebounding from bad credit or have no business credit history.

Build business credit with a fuel card

Fleet fuel cards provide fleet owners and truckers with a highly effective way to build business credit. When rebounding from bad credit or building business credit history, fuel cards are the go-to choice. Remember to do your homework before applying for a business fuel card. Choosing the right card for you will set you on your way to building business credit.

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