Good credit is an important aspect in both your personal life and in your business. Many people often assume that they are one in the same, but they are not.  There are different factors considered when it comes to figuring out your business versus your personal credit score. The organizations that report and monitor personal credit are separate and completely different from the organization that monitors business credit. Many new business owners do not establish business credit for their business and instead personally guarantee everything. In doing so, their personal credit is hurt and their business cannot stand on its own.
 
Personal credit scores are determined by a number of factors such as bill payment, debt to income ratios, and total credit card debt and history. If you are late when paying your bills, this will show up on a personal credit report. If you have many unsecured debts such as credit cards, it may negatively affect your credit score. Generally, it is recommended that you pay off credit cards and other debts on or before the due date to keep your credit score as high as possible. It is also important to keep a close watch on your debt to income ratio, which can be achieved by living within your means and by avoiding overspending. Try to pay cash for items rather than charge them on a credit card. 

Business credit is determined in a different manner. The business credit score is determined by the payment history of the bills that are specifically for the business. This can include utility bills, bank loans, and payments to vendors that report to the credit bureau (Dell is one company who reports your payment history to D&B).Your financial assets are also included in determining your credit worthiness. Financial history, current assets and liabilities are three important aspects that will help you to determine your score. It is a good idea to avoid revolving credit lines or the use of business credit cards when possible as these may lead to a lower score.

It is important to keep the two scores entirely separate. In the event that the business fails, you would not want to lose your home or your savings in the process. Try to avoid “guaranteeing” any bank loans that are for the business, when possible. The more you can separate your individual credit from the business the better. Otherwise, your risk negatively impacting your personal credit if the business is unable to pay its debts.
 
Good credit is something that everyone and every business should strive to achieve. To learn more about business credit visit the D&B website.