Guide to Personal Credit vs Business Credit
Share this article:
What Is Business Credit vs Personal Credit?
Business Credit Score
Dun & Bradstreet® PAYDEX® Score Equifax® Commercial Risk Scores and Indicators Experian® Intelliscore Plus℠ Current debt Payment habits Available credit Trade credit Liens and bankruptcy filings Time in business Type of industry
Personal Credit Score
Equifax Experian TransUnion® Payment history Total debt owed Credit utilization (percentage of credit available that is currently being used) Length of credit history Types of credit (e.g., credit cards vs. loans) New or recent credit
How Do Business Credit Scores Work?
Dun & Bradstreet PAYDEX Score. This business credit score ranges from 1 to 100, where a higher number represents a greater likelihood that a business will pay its debts on time. Equifax Payment Index (PI) Score. This business credit score ranges from 0 to 100, with zero being the best score reflecting excellent habits of paying bills when due and 100 being the absolute worst PI score. Experian Intelliscore Plus V3. This business credit score ranges from 300–850, where a higher number represents a lower risk of severe delinquency or bankruptcy in the next 24 months.
How Do Personal Credit Scores Work?
Why You Need Business Credit
You might need good credit scores for business loans You can apply for business credit cards without a business Some lenders offer no credit check business loans
Key Differences Between Business and Personal Credit
Pros and Cons of Keeping Personal and Business Credit Scores Separate
If your personal credit is weak, establishing good business credit can help you qualify for loans you wouldn’t otherwise be able to get Many lenders require you to have both personal and business credit scores in order to qualify for financing Having business credit helps you avoid personal liability for your business’s debts
There are fewer legal protections for business credit, which can make it more difficult to get any mistakes on your credit report corrected If you sign a personal guarantee for a business loan, you’ll still be personally responsible, even if you have worked to establish separate business and personal credit Business credit card delinquencies can damage your personal credit scores
6 Tips for Keeping Personal and Business Credit Scores Separate
1. Open Credit Lines With Vendors
2. Choose Your Business Structure Carefully
3. Create a Business Credit File
4. Open a Separate Business Bank Account
5. Apply for a Small Loan
6. Get a Business Credit Card
How Can Personal and Business Credit Affect Each Other?
Find Out What Kind of Financing Your Business Credit Score Gives You Access to
Frequently Asked Questions
About the Author
Share this article: