You probably already know that when you want to borrow money, your credit is one of the first keys to qualifying. The better your credit, the more likely you are to qualify for a loan or financing at lower interest rates and favorable terms.

Of course, as a small business owner you don’t have just your personal credit reports to manage. You need to pay attention to your business credit reports as well.

When you check your business credit for the first time, you may find it confusing or surprising. Understanding the differences—and similarities—between personal and business credit can be tremendously helpful.

What’s the Difference Between Business and Personal Credit?

Here, we’ll talk about the main differences between business and consumer credit reports, including:

• Credit reporting agencies
• Credit scoring models
• Types of information reported

Then we’ll provide tips to improve your credit history as a business owner.

Credit Reporting Agencies

Credit reports are generated and sold by credit reporting agencies (also known as credit bureaus). The Big Three consumer credit reporting agencies are:

• Equifax®
• TransUnion®
• Experian^TM

Commercial credit reports are maintained and sold by a number of companies. In the US, the major business credit bureaus are:

• Equifax®
• Experian^TM
• Dun & Bradstreet®

Other business bureaus include Creditsafe and LexisNexis®.  
You may notice that both Equifax® and Experian^TM compile and sell both personal and business credit reports. Yet the data for each type of report is kept separate; they are separate business units.

How Information Differs on a Business vs Personal Credit Report

Credit reports contain a lot of similar types of information, whether we’re talking about business or personal credit. Still, the information featured on commercial credit reports and personal credit reports isn’t exactly the same.

Here’s a look at the types of information which might appear on your personal credit report versus a business credit report.

Personal credit reports

Identifying Information (e.g. name, addresses, social security number, date of birth, etc.)

Current and closed accounts (e.g. mortgages, credit cards, auto loans, personal loans, student loans, etc. plus the payment history and balances of those accounts)

• Collection accounts
• Public records (e.g. bankruptcies—formerly judgments and tax liens as well)
• Credit inquiries
• Credit score*

*A credit score isn’t technically part of a personal credit report. Rather, it’s a separate, add-on product often sold alongside a personal credit report.

Business Credit Report Information

Most business credit reports include:

• Business background Information (e.g. owners, parent companies, subsidiaries, employer identification number, industry, etc.)
• Business financial information (if available – bank account balances, returned checks, assets, real estate owned, inventory, sales, etc.)
• Banking, trade, and collection history (e.g. accounts opened in the business’ name and the payment history on those accounts)
• Liens, judgments, and bankruptcies
• Credit inquiries
• Uniform Commercial Code filings (UCC filings)
• Credit scores*

*A business credit score might also be sold as an add-on product.

Key Differences in Reports

A few key differences you may notice when you check your business credit reports for the first time:

Business credit reports don’t usually list the names of the companies reporting payment history. They will categorize accounts by type of account (bank card, or telecom, for example), but they won’t specify the name of the financial institution issuing the business card, or the name of the telecom provider. 

Payment history is reported as Days Beyond Terms or DBT.  Let’s say your supplier offers you payment terms of net-15. If you pay the invoice on day 20, the account is 5 days beyond terms or 5DBT. That means payments that are just a little late can affect your credit scores. 

Credit limits aren’t commonly reported. In order to assess debt, business credit scores may look at recent high balances instead of credit limits to calculate a credit utilization ratio. 

On the consumer credit side, the Fair Credit Reporting Act (FCRA) limits how long negative information can be reported (usually no more than 7 years); gives consumers the right to free credit reports at least once a year from every national consumer reporting agency; and requires credit reporting agencies to respond to dispute in a specific time frame. These protections do not apply to business credit. 

Different Credit Scoring Models

All credit scores are designed to summarize creditworthiness. Credit scoring models are designed to help lenders and other businesses predict credit risk, or other types of risk (for example, insurance). Many credit scores predict the likelihood that a borrower will pay late at a specific point in the future.

Neither you nor your business have “one” credit score. Rather, dozens of credit scoring models are available for purchase. Ultimately, it’s up to each lender to decide which brand, type, and version it prefers.

Here’s a look at the most popular brands and models of credit scores used by lenders in personal credit and business credit:

Personal Credit Scores	Score Range
FICO® scores (various versions, or models)	300 – 850
VantageScore®  (4.0, latest model)	300 – 850

Select Business Credit Scores	Score Range
Experian Intelliscore PlusSM	0 – 100
Experian Financial Stability Risk ScoreSM V2	300 – 850
Equifax Business Delinquency ScoreTM	101 – 662
Equifax Business Failure ScoreTM	1000 – 1604
FICO® Small Business Scoring Service℠ (SBSS℠)	0—300
FICO® Small Business Scoring Service℠ (SBSS℠) V3	300—850
D&B® PAYDEX® Score	0—100
D&B® Failure Score®	1001—1875
D&B® Delinquency Predictor Score	101—670

Some business credit scores are based upon only the information from a single business credit report. However, a few credit scoring models offer blended scores that can evaluate data from both business and personal credit reports. The FICO SBSS score is one example.

Business Credit vs Personal Credit Reporting

Here are some key differences between business and personal credit summarized:

	Personal Credit	Business Credit
Free credit reports	Required annually	Not required by law
Account information	Includes names of creditors reporting	Does not include names of creditors reporting
Payment history	30 day increments	Days Beyond Terms (DBT)
Credit limits	Usually reported	Often not reported
Negative information	Fair Credit Reporting Act (FCRA) usually limits derogatory information at 7 years	FCRA does not apply; no limit on reporting periods
Credit scoring models	Main models: FICO and VantageScore	Many different models

When a Personal Credit Score Is Used To Approve a Business Credit Application

If you’re trying to get some of the best small business loans, including bank loans and SBA loans, your personal credit history often matters, too. Most business credit card issuers review the applicant’s personal scores (such as VantageScore or FICO scores). 

It’s common for business lenders to check personal credit, especially when a personal guarantee is involved. 

You can build business credit even if your personal credit scores aren’t great, but don’t ignore personal credit. 

Lenders and companies that offer business financing will often use a soft credit check when reviewing personal credit. And many times they are looking for red flags like delinquent payments, a very low personal credit score that falls into the “bad credit” category, or bankruptcy. 

How to Improve Business Credit Scores

Want to keep more of your hard-earned money? Good credit can help. 

If you want a chance to improve your personal or business credit scores, here are three things you’ll want to do:

• Check and monitor your personal and business credit reports and scores.
• Avoid late payments. Your payment history is the most important factor considered by most credit scoring models.
• Keep debt in check. Debt itself isn’t always bad; it’s more a matter of how you manage it. 

If your goal is to build business credit for the first time, you’ll need to get credit accounts that will appear on your business credit profile and make on-time payments. These tradelines can include:

• Net-30 vendor accounts
• Business credit cards
• Business lines of credit and loans
• Nav Prime

Read: How to Build Business Credit Fast and How to Improve Your Business Credit Score 

Remember, your credit scores are calculated by a complex algorithm. You have no control over which credit bureau or type of credit score a lender uses.

However, you do have the most control over the information upon which your credit scores are based. Both your personal credit scores and your business’ credit scores are calculated based on the information in your credit reports, and payment history and debt are almost always the two most important factors. 

That means focusing on paying on time is one of the best ways to build and protect your credit scores. 

How Nav Can Help 

Nav’s free financial health platform is built for small business owners to track and improve business credit and cash flow health.

With Nav Prime™, the paid offering, you’ll get business credit scores* and Detailed Credit Reports from two leading business credit reporting agencies: Equifax® and Experian™, along with business credit scores Equifax® Business Delinquency Score® and  Experian™ Intelliscore PlusSM V2. 

As we’ve emphasized here, personal credit also matters to many business lenders, and with Nav Prime you’ll get personal credit scores and detailed reports from Experian™ and TransUnion^®. Scores provided are the TransUnion^® VantageScore^® 3.0, and Experian™ VantageScore^® 3.0. 

Reports and scores are updated monthly when you log in. Understand what information companies are reporting about your business, and view both business and personal credit in one dashboard.  

In the Credit Health hub, see aggregate trends in your credit, key factors having the most impact on your scores, and keep track of new progress you’ve made. 

You’ll also see details on public records, including UCC filings, that can directly and indirectly impact financing or other opportunities. 

Nav Prime offers a tradeline submitted monthly to the major business credit bureaus to help you build and maintain a strong business credit history. 

Frequently Asked Questions

Can you use your personal credit score for business?

Personal credit can help you build business credit. For example, your personal credit may help you qualify for a business credit card. And that can, in turn, help you build business credit. 

Can anyone pull a business credit report?

Unlike personal credit, there are no restrictions on who can purchase business credit reports. 

Does personal credit affect business credit?

Personal credit and business credit data are kept separate. That means that generally your personal credit does not impact your business credit. However, there are some blended credit scores that use both personal and credit data to create a business credit score. 

Does business credit affect personal credit?

Most business loans and financing don’t appear on personal credit reports. However, many different types of business loans and financing require a personal guarantee (PG). If you’ve signed a PG and don’t repay the debt, it may appear on your credit reports as a charge-off or collection account etc. While this isn’t common, it is possible for business credit to impact your personal finances. 

Can I build business credit as a sole proprietor?

Yes, while it’s best to form a legal entity such as an LLC or corporation, you can build business credit as a sole proprietor.

*Nav provides access to Experian™ Intelliscore PlusSM V2, Equifax^® Business Delinquency Score^®, TransUnion^® VantageScore^® 3.0, and Experian™ VantageScore^® 3.0. VantageScore is a registered trademark of VantageScore, LLC.