Personal Credit vs Business Credit

August 6, 2019
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You may know the significance of what the number attached to your personal credit score means but how does it differ from a business credit score?

Personal Credit Score

Your personal credit score is connected to your social security number and is curated by three major credit bureaus: Equifax, Experion, and Transunion. It’s summarized by a number ranging from the 300s, being very bad, and up to the 800s, very good.

What makes up a Business Credit Score?

A business credit score is linked to an EIN (employer identification number) and it’s separate entirely from your personal credit history. The major bureau your business credit is reported to is Dan and Bradstreet with numbers ranging from 0 to 100. There are fewer variables for business credit scores but more so determined by how you pay your bills for the business. Without business credit, it would be hard to get money from lenders to start up or expand.

Can I use my personal credit score to operate a business?

It’s not wise to use your personal credit score as the IRS has strict rules on mixing business with personal scores. Sometimes there are exceptions like if you operate a sole proprietor business and your personal and business funds come out of the same funds. It does look more professional to pay bills with business funds so try and open a business checking account and have all expenses come out of it. Having a separate account for your business is a good way to build credit by taking out small loans that can easily be paid back; this is a great way to boost up your business credit score. Not to mention it makes the bookkeeping so much easier. Using your personal credit score puts you and your family at risk. If the business fails, creditors will come after you, which essentially could include your family, instead of just the business.