Personal credit and business credit are built on different systems, use different files, and matter in different situations. Understanding the distinction matters whether you are an individual, a business owner, or both.
Personal credit is tied to you as an individual and reported to the nationwide consumer reporting agencies. It is what most lenders look at when you apply for a personal loan, mortgage, auto loan, or credit card. It is also what many small-business lenders look at when you personally guarantee a business loan.
Business credit is tied to your business entity. Business credit files are maintained by business credit reporting agencies and may include trade lines with vendors and suppliers, business loans, and other business financial activity. Business credit does not automatically build from personal credit.
Even when you have a business credit file, many lenders still look at personal credit — especially for small businesses and when the owner personally guarantees the debt.
If this guide raised questions about your specific situation, we are happy to help.
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