How To Differentiate Personal Credit Scores and Business Credit Scores

You already know that your credit score counts for a lot when you’re in the market for a loan. What you may not be as aware of is that while business credit and personal credit may be similar, they’re not the same.

Here’s a breakdown of the differences between the two.

Business vs Personal Credit

As far as what your credit rating means to a potential lender, business scores and personal scores more or less serve the same purpose. Both help the lender determine whether or not you’re a good risk, as well as give them some idea of how quickly you’ll probably repay your loan. The higher the score, the safer the risk. There are key differences you’ll want to be aware of though, including the following.

  • You already know from monitoring and maintaining your personal credit that the actual score can be anywhere from 300 (very poor) all the way to 850 (exceptional). Business scores, on the other hand, are rated from one to 100 instead with a score of 75 and up considered excellent.
  • Your personal credit score is private, but your business score is actually publicly available. Although they may have to pay for the privilege, pretty much anyone can obtain your business’s rating from any one of the major credit reporting entities.
  • Personal credit is tracked by social security number. Business credit, on the other hand, is tracked by employer identification number (EIN), as well as name and address.

Why Business Credit Matters

When you’re hard at work running an existing business or planning a future one, your business’s credit rating may not seem all that important. You figure you can worry about it later when you aren’t as busy handling other concerns, and that’s fine. Don’t make the mistake of waiting until it’s too late though. 

A good business credit score can help you get ahead to a greater degree than you think. It can get you access to the best repayment terms and lowest rates when you need funds for an expansion, a second location, or anything else that might need to help your business grow. It also makes your business look good to literally anyone who might be interested (e.g. investors or insurance agents).

That said, it pays to keep your rating in mind right from the get-go. (Building good business credit is similar to building your personal credit.) It will make a huge difference in the long run.

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