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I've spent years arranging financing for small and midsized businesses (SMBs). One question I hear constantly is how business and personal credit differ.
The two scores work differently, come from different credit bureaus, run on different scales, and lenders read them for different reasons. Below, I cover the differences and how to build a strong business credit profile.
Personal Credit Scores, Explained
Your personal credit history follows your Social Security number (SSN), regardless of how many businesses you own (open or closed).
Three consumer credit bureaus track your personal credit history: Equifax, Experian, and TransUnion. They keep a personal credit report of your credit cards, car loans, payment history, and mortgages.
A FICO score is how most lenders score that report. It runs from 300 to 850, and five factors impact the number:
Payment history
Missing a payment can move your score. Paying on time keeps it consistent.
Credit utilization
This is how much of your available credit you're using. Lower is typically better.
Length of credit history
The longer you've had an account, the better it looks on your credit report.
Credit mix
Lenders consider what type of credit you're using. A blend of different account types may look stronger to credit bureaus.
New credit
Any time you have a hard inquiry on your credit, that can shave off a few points. Doing this several times in a short window can have a big impact on your score.
Business Credit Scores
Business credit follows your business. It uses your Employer Identification Number (EIN) or your DUNS number, which is the nine-digit ID Dun & Bradstreet assigns to businesses.
The business credit bureaus that track business credit scores are Dun & Bradstreet, Experian Business, and Equifax Business. They look at business credit cards, loans, leases, payment records, and public records, including bankruptcies and liens.
Unlike your personal credit history, your business credit report is often publicly viewable. A landlord, supplier, or competitor is able to view it without your permission.
There isn't a single business credit score. Each bureau has its own model, and a good number means something different at each one.
| Score model | Bureau | Range | What it measures |
|---|---|---|---|
| PAYDEX | Dun & Bradstreet | 1 to 100 | How quickly you pay vendors or suppliers |
| Intelliscore Plus | Experian Business | 1 to 100 | Odds of a serious delinquency in the next 12 months |
| Business Credit Risk Score | Equifax Business | 101 to 992 | Odds of falling 90 or more days behind |
| FICO SBSS | FICO | 0 to 300 | A mix of business and personal data used in small business lending |
Business Credit vs. Personal Credit
Here's a quick breakdown of the differences between business credit and personal credit.
| Factor | Personal credit | Business credit |
|---|---|---|
| Scoring | FICO | Varies by bureau |
| Tied to | Social Security number | EIN or DUNS number |
| Liability | You're personally liable | The business is liable unless you sign a personal guarantee |
| Reporting | Equifax, Experian, TransUnion | Dun & Bradstreet, Experian Business, Equifax Business |
| Who can see it | Private (limited legal access) | Public |
| Credit types | Credit cards, mortgages, auto loans, personal loans | Vendor accounts, business credit cards, lines of credit, business loans |
| Use of funds | Personal spending | Business expenses only |
Keeping Your Business and Personal Credit Separate
It's a smart idea to keep your business and personal credit separate.
Using a personal credit card for business expenses is common, but it becomes an issue when you start charging a lot. That can impact your personal credit score, even if you plan to pay it off quickly. Mixing business and personal credit can also weaken your liability shield, especially if you have an LLC or are a corporation.
Having a strong separation is important, but there may still be instances where your personal and business credit overlap. When you're applying for financing, you'll still be asked to sign a personal guarantee. This puts your personal assets behind the business debt.
Personal credit can also drive some business financing. For example, a home equity line of credit (HELOC) is largely based on your personal creditworthiness, but can be used to pay for certain business expenses.
In my experience, SMBs who monitor both their business credit score and their personal credit score have better outcomes with lenders.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
How To Build Business Credit
Building business credit is a slow and steady process. Here are some strategies to help improve your score.
Set up the business
Register your business and get an EIN. Then request your DUNS number.
Open a business bank account
Keep your business and personal spending separate by opening a business checking account.
Get credit that reports to bureaus
Business credit cards or vendor accounts report to bureaus and can help raise your score over time.
Pay early
PAYDEX rewards paying ahead of time, which can help improve your score.
Keep an eye on your reports
Review your business credit reports at least once a year. Dispute anything that's wrong.
Add tradelines slowly
A few well-managed accounts over a longer period of time are better than new ones opened simultaneously.
The Right Financing To Build Your Business Credit Profile
Choosing the right financing can help to improve your business credit score if you pay on time and keep a close eye on your credit utilization.
When you're ready to explore what you qualify for, apply today and see options from Clarify Capital's network of 75+ vetted, reputable lenders. Many of our lenders report to business credit bureaus.
Frequently Asked Questions on Business vs. Personal Credit
These are the most common questions I hear from SMBs about the differences between business and personal credit.
What's Better, Business Credit or Personal Credit?
They do different things. Personal credit follows your SSN and covers personal borrowing. Business credit follows your business. Most SMBs benefit from keeping these separate.
Does an LLC Have Its Own Credit Score?
Yes, an LLC can get an EIN and a DUNS number. These build business credit through accounts that report to business credit bureaus.
Is It Hard To Get Business Credit?
Most lenders want to see some operating history before they extend an offer. So the first account is often the hardest for SMBs to get. Once you have a business account up and running, adding more gets easier.
Can I Use Business Credit for Personal Use?
You shouldn't use business credit for personal use. Most credit card agreements say this directly. Beyond the contract issue, personal spending on your business accounts complicates your bookkeeping. It also weakens the liability separation that an LLC or corporation provides.
How Does Business Credit Impact Personal Credit?
Business credit usually doesn't impact personal credit. The exception is a personal guarantee: If you signed one and the business defaults, the debt can land on your personal credit report. Some business credit cards also report to consumer bureaus.
How Does Clarify Capital Protect My Data?
Clarify Capital follows SOC 2 security principles, and your information is used to match with lenders in the network. Checking your options won't impact your credit score.
Bryan Gerson
Co-founder, Clarify
Bryan has personally arranged over $900 million in funding for businesses across trucking, restaurants, retail, construction, and healthcare. Since graduating from the University of Arizona in 2011, Bryan has spent his entire career in alternative finance, helping business owners secure capital when traditional banks turn them away. He specializes in bad credit funding, no doc lending, invoice factoring, and working capital solutions. More about the Clarify team →
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