Business Credit & Personal Credit | A Detailed Comparative Look

Business Credit & Personal Credit: As a businessman who also has a personal life, please note. It is important you know the thin line between business and personal life. If you own a business, you may have considered the idea of trying to get a loan.

Business Credit vs Personal Credit - A Comparative Look

Whether you have considered a loan for your business or not, business credit can seem a bit confusing. How exactly can you get business credit? And how much does your personal credit rating factor into it all?

Please note that it is a good idea to keep business and personal finances separate. However, business credit sometimes overlaps with personal credit.

How Business Credit Works

When grading business credit, the reporting agencies look at a number of factors. Does your business have a line of credit or an existing business loan? Your payment history on those will factor into your business credit rating.

It is important you know that public records can also play a part in your business’s credit rating. Those records could include anything from a bankruptcy filing to news articles about your shop. Also, it could include; zoning permits showing an applied-for expansion.

Sometimes those public records paint a picture about the health of your business. Unlike with personal credit, a business credit rating can vary. This is based upon the agency reporting it since they do not all use the same scale.

How Personal Credit Works 

You are probably already familiar with how personal credit works. There are three major reporting bureaus that handle personal credit.

It is important you know that they generally report the same data. However, sometimes there are accounts that one bureau reports while another does not. As a result, the ratings between bureaus can vary slightly. Despite this, they stay within 20 points.

With personal credit, lenders are looking at your personal ability to pay your financial obligations. These obligations include an auto loan, mortgage, or credit card debt.

How Can You Build Business Credit?

Building business credit is slightly different from building personal credit. In a business, it is important that you have solid payment history. Also, it is critical to build credit relationships with vendors and suppliers.

How Can You Build Business Credit?

These relationships help establish your credit history. And, if you can purchase supplies or inventory on 60-day credit terms, it helps your business grow. Also, it creates trade references for your business. This shows as positive items on a Dun & Bradstreet report.

It is necessary you know this. Keeping credit debt low and payments on time helps build a reputation for your business. This will let lenders know you are a low-risk borrower. Also, it shows vendors and suppliers that you are worth doing business with.


Business Credit

  • Business credit is based on your business’s financial history.
  • This is tied to your business’s EIN number.
  • This credit is calculated using different factors.
  • Please know that it is reported by Experianand Equifax.
  • You can challenge anything on your business credit reportthat you want. However, the difference is that he issuer is not legally obligated to respond.

Personal Credit

  • Personal credit is based on your personal spending history.
  • It is tied to your social security number.
  • Also, it is compiled by the three major credit bureaus, Equifax, Experian, and Transunion.
  • In personal credit, there is a greater legal protection.


Despite the differences between business credit and personal, they share similarities.

  • They both aim at giving out loan.
  • Also, they both have laws that guide their operations.
  • They both deal with financing either an individual or group.

Business Credit Score vs. Personal Credit Score

  • Personal Credit Score

Please know that the business credit scores and personal credit scores are different. Though both use number that represents credit worthiness, they are different. It is important you know this. Your personal credit score is a numerical summary of your personal spending history.

This ranges from 300-850, with a higher score denoting better creditworthiness. Generally, your personal credit score is calculated based on credit reports. These reports are from the three major credit bureaus.

Banks and lenders use your personal credit score to determine whether to lend you. A good credit score means you will qualify for lower-interest credit.

  • Business Credit Score

Business credit score, on the other hand, is a numerical measurement. This measurement is based on how creditworthy your business is. Also, it is tied to your EIN.

A business credit score typically ranges from 1-100. The higher the number, the more likely lenders are to extend your credit.

Business Credit Score vs Personal Credit Score – Differences

The method for determining your personal credit score is pretty standard. On the other hand, there is more variation for business credit scores. However, this depends on the credit bureau.

Thus, in the study of business credit vs personal credit, pay more attention.

Is Business Credit Based on Personal Credit? 

The answer to this question is technically no. This is because business credit and personal credit are different. However, there are things you should know.

In some cases, your personal credit influences your ability to qualify for business credit products.

Does Personal Credit Affect Business Credit?

Again, technically these two concepts are separate. However, as explained, your personal credit affects your ability to obtain business credit products. Therefore, by this, influences how you can grow and improve your business credit.

Also, your personal credit history can affect your qualification prospects.  It can also affect the specific terms of a business credit product.

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Does Business Credit Affect Personal Credit? 

There are scenarios in which your business credit can affect your personal credit. For example, if you are using a business credit card to build your business credit history. Also, if you signed a personal guarantee, it can.

If you signed you will then be held personally responsible for paying even if your business cannot. This could, in turn, affect your personal finances and credit.

Furthermore, your business credit card activity may be reported for your personal credit reports. This can happen in addition to your business credit reports. These possibilities make it even more important to closely watch your business credit.

How to Separate the Two

Separating business and personal credits can save you from complicated bookkeeping. Also, it can help protect your personal assets and liability. Furthermore, it can actually improve your business loan and credit prospects.

The best ways to start separating your business credit from your personal ones are:

  • By Opening a Business Checking Account

This will give you one place to store your business funds. Also, it will pay for business expenses. It will make easier to manage your books and ensure that business funds are separate from personal.

  • Applying for and using a Business Credit Card

Additionally, applying for and using a business credit card can be of help. It can help you keep your finances separate. As well as also building your business credit history.

A business credit card will also make tracking expenses easier. Also, it is a great way to establish good business credit. This credit can be useful to you as your business grows.

In a Nutshell

From the above, there are clear differences between business credits and personal credits. Despite that, they are also connected in many complex ways.

In a Nutshell

Setting up a business bank account and using a business credit card are both great ways to separate your finances. Also, hopefully, it will enable you to establish your business’s credit history.  It will also make qualifying for funding easier in the future.

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