As a small business owner, many facets of the business might flow over into your personal life to the point where there is little to no distinction between personal and business.  This can be especially true when it comes to credit and financials. So what is the difference between personal credit and business credit, if there is any?

For some sole proprietors, there might not be a difference as they might use their personal credit for their business. Although this is technically legal, it is not always recommended in case the business ever gets into financial trouble.  That is why it is recommended that all businesses register for an Employer Identification Number (EIN).

Personal Credit

Personal credit is connected to your Social Security Number (SSN) and reported on by three major credit bureaus: Equifax, Experian, and Transunion. From a personal credit standpoint, there is more legal protection as we can challenge any items that we believe do not belong in our credit histories. 

Tips for building your credit score

Read Tips For Building Your Credit Score if you are wanting to learn how to grow your personal credit history. 

Business Credit

Business credit is tied to your Employer Identification Number (EIN) which is specific to business entities. Equifax and Experian are major credit bureaus that also report on businesses and individuals, but the largest credit bureau solely for businesses is Dun & Bradstreet. As a business, you can still challenge items on your credit history, but no one is legally obligated to respond so that is part of the reason it is so important to keep an eye on the business’ finances. 

Now that you know the difference between the two, learn How to Build Business Credit for a Small Business. Here is a preview: open and use a business credit card for business expenses. This will not only help you establish credit for your business but will make your business appear more professional in having its own account. Feel free to contact us here at TSB if you have any other questions!

Share this Post