This article is for educational purposes and does not constitute financial, legal, employment or tax advice. For specific advice applicable to your business, please contact a professional.

Business credit vs personal credit: Key Differences

When you first open a business, your company has no credit history, making it challenging to get loans and a credit card, even if your personal credit is strong. You may be wondering, “Do I need business credit?” While you might be tempted to turn to your personal credit, experts recommend keeping your business credit and personal credit separate to limit your personal liability.

As you look to grow your business, you may need money to fund the expansion. Say you want to purchase a second food truck to serve a new area, or you need to buy a new freezer so you can add ice cream to your coffee shop’s menu — these are just a few of the business expenses that need capital to support them.

So how hard is it to get business credit? And what’s a business credit score vs. a personal credit score? Read on to learn how to build business credit and how it’s different from your personal credit. 

What is the difference between business credit and personal credit?

While your personal credit details your history of borrowing, opening credit cards and payment and credit history, your business credit shows the same types of activities made on behalf of your business.

According to Experian, your personal credit score can affect getting business credit if the lender checks your personal credit as part of a loan approval process. If this check is performed, it registers as a hard inquiry on your personal credit report. Some business lenders may report to consumer credit bureaus — especially if a personal guarantee is involved or if payments are missed. Others, only report to business credit bureaus or may not report at all.

Using business credit — such as a business credit card — is one way to build your business credit, so you can more easily qualify for business loans in the future. Purchases you make for your business on a personal credit card, however, do not build business credit.

Business credit score vs. personal credit scores

The key difference between business credit and personal credit is that business credit is tied to your company or Employer Identification Number (EIN), while personal credit is linked to your Social Security Number. 

A business credit score, usually available through a business credit monitoring agency like Dun & Bradstreet’s PAYDEX or Experian Intelliscore, reflects your company’s creditworthiness based on trade accounts, loans, and payment history with vendors and lenders. A business credit score vs. a personal credit score, ranges from 0–100 or 1–100, depending on the bureau. A score over 75 is considered low credit risk. That score will influence loan terms, supplier credit, and interest rates for your business.

On the other hand, a personal credit score, like a FICO score or VantageScore, tracks your individual credit history with credit cards, mortgages, and automobile loans and ranges from 300–850. Scores over 670 are considered good credit scores. While small business lenders often check personal scores (especially for startups), strong business credit helps separate your company’s finances from your own. To establish a business account and begin building your business credit, you need to use an an EIN instead of your Social Security number. Many businesses start establishing business credit through a credit card with a lower limit and build credit by paying on time.

If you apply for Small Business Administration (SBA) loans, your FICO® LiquidCredit® Small Business Scoring Service score will be calculated during the lending application process. This type of business credit score is between 0 and 300. 

Do I need business credit?

As a small business owner, you absolutely need business credit if you want to protect your personal finances, simplify accounting, and unlock better funding options. Relying solely on personal credit mixes business and personal liabilities, risking your personal assets if your company struggles. The IRS also scrutinizes blurred financial lines, which could potentially lead to denial of business deductions or, worse, an audit.

A separate business credit profile (tied to your EIN) strengthens loan approvals, secures vendor terms, and builds credibility, all while keeping your personal credit score untouched. Plus, clean financial separation makes bookkeeping easier and audits less stressful. Building business credit isn’t just smart; it’s essential for growth and risk protection.

Should you use personal credit for business purposes?

According to the Consumer Financial Protection Bureau, almost 10% of small business owners use their personal credit cards to fund business endeavors. But using your personal credit for business is not a great idea. Experts caution against mixing personal and business credit. Mingling personal funds and credit with business funds and credit could cost you protection from personal liability if your business defaults on a loan, is party to a lawsuit, or goes bankrupt, for example. Using business credit solely for business purposes helps you build your business credit score and allows you to more easily obtain credit in the future. Purchases you make for the business on a personal credit card do not build business credit. 

Using a business credit card or trade credit also makes it easy for employees to make approved purchases. For example, if you don’t have a business credit card and your head chef wants to go to a farmers’ market for fresh local produce, you’ll need to reimburse them for the purchase (which creates extra paperwork and does not help build your credit).

Types of business credit

Businesses can apply for a wide range of business credit and loans. Here are a few of the most commonly used:

• Term loans lend a fixed amount to a company with a fixed monthly payment and length of the loan. SBA loans fall into this category and can offer low interest rates for businesses that qualify. Certain businesses may also qualify for microloans, which are provided by nonprofit organizations and mission-based lenders and are for up to $50,000.
• Business lines of credit allow you to borrow up to a limit, and you can borrow additional money once the balance is below the limit. You only pay interest on the amount borrowed.
• Business credit cards are technically revolving lines of credit, but allow for more flexibility to give designated employees purchasing power, something that differentiates business credit cards from personal credit cards. While some offer rewards, others also have an annual fee.
• Vendor accounts, also known as trade credit, allow you to pay for goods and services within a set period of time after purchasing, typically net-30, meaning 30 days after purchase. The ability to use trade credit is one of the biggest differences between business credit and personal credit. Benefits of trade credit include freeing up cash flow and financing short-term growth. For example, a food truck business may have a vendor account or trade account with its beverage supplier. The vendor allows the truck owner to purchase food on a weekly basis and could offer discounts for paying more quickly within a set time or, alternatively, set a late penalty for paying after the term.
• Payment processor loans are loans offered directly through your payment processor (like Square Loans), which are based on business performance rather than a traditional credit check. These may take the form of term loans or lines of credit, and repayment is often tied to a percentage of daily sales.

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The financial health of your business will determine its long-term success. Start your business off on the right foot by opening a separate business checking account, requesting an EIN to identify your business, and applying for a business credit card. By actively protecting and managing your business credit score, you can grow your company and continue to serve customers for many years in the future.

Business credit vs personal credit FAQs

Does business credit show up on your personal credit?

Business credit typically doesn’t appear on your personal credit report unless you personally guarantee a loan, miss payments, or use a personal credit card for business expenses.

Is it better to have business credit or personal credit?

Business credit is better for separating liability and securing higher financing, but strong personal credit is still essential, especially for startups or when lenders require a personal guarantee for a business loan. Build both your business credit and your personal credit to protect your assets and maximize funding options.

Does an LLC have its own credit score?

An LLC can build its own business credit score with a credit reporting entity like Dun & Bradstreet’s PAYDEX once the LLC has an EIN, opens business accounts, and establishes trade lines that are separate from the owners’ personal credit.

Is it hard to get business credit?

It can be hard to get business credit. Building business credit requires time and discipline. You’ll need to establish trade accounts, pay vendors on time, and secure small loans, but it’s a straightforward process with consistent effort, especially once your business has its own EIN and financial track record.

How do you build business credit?

You can build business credit by registering your company, obtaining an EIN, opening a business bank account, securing vendor or store credit (Net 30 accounts), using a business credit card responsibly, and ensuring lenders and vendors report your on-time payments to business credit bureaus like Dun & Bradstreet, Experian, and Equifax.