Personal vs. Business Credit Score: What’s the Difference?


When you’re playing the game of business financing, the more points you score the better. Your business credit score is not the same as your personal credit score, but most lenders will want to review both scores before offering financing, so understanding the difference is essential.

Personal Credit Score

Your personal credit score is based on your history as an individual borrower and reflects your ability to pay back a debt. The credit reporting agencies (Equifax, Experian and TransUnion) assign your score based on several criteria:

  • your payment history (Have you paid your bills on time?)
  • the amounts you owe (Carrying a high balance on your cards will lower your score.)
  • the length of your credit history (If you’ve never had debt before, the credit bureaus don’t know if you’ll be a reliable payer.)

The types of credit you have can also affect your score. It’s generally favorable to have a mix of secured debt, such as a home mortgage, and revolving debt, such as credit cards (as long as you pay off the balance each month).

Business Credit Score

Your business credit score looks at whether the business is a good candidate for debt financing, rather than you as an individual. It focuses on the company’s financial history, calculated based on your payment history with vendors, suppliers and business lenders.

If you’ve never had a business loan before, consider opening a credit account with vendors you use regularly.

Pay to Build

Just by paying your bill on time each month, you’ll start establishing a business credit history that can help you access business credit and better rates.

For new business borrowers, lenders are likely to consider both scores. But as you build business credit, your personal score will become less important, allowing your business credit — and your business — to stand on its own.