Introduction
Every business, even the small ones, wants to grow. But getting the money needed for that growth can be tricky. Banks are usually the go-to for loans, but you often need a good business credit score to get one. Whether you’re looking to buy equipment, stock up, or move to a new place, your credit score can make a big difference in getting a loan and what interest rate you’ll get. It can get confusing for new business owners when they don’t know how to separate personal and business credit. This blog will break down what business and personal credit scores are, point out how they differ, and show you how to check both. It’ll also discuss how your business credit might impact your credit.
What is a Business credit score?
A business credit score, or commercial credit score, is a number that shows how likely a business is to get a loan or work with suppliers. Companies that score credit look at things like credit history, how big a business is, how long it’s been around, and any legal issues it might have.
How Business Credit Score Works
When a business wants a loan, lenders look at its credit score along with factors like revenue, profit, assets, debts, and how much the collateral is worth. For small businesses, lenders might also check the owner’s credit since the two often mix.
The main credit agencies—Equifax, Experian, and Dun & Bradstreet—have different scoring methods. Business credit scores range from 0 to 100, where higher scores mean less risk, while personal scores fall between 300 and 850.
How Business Credit Scores Are Calculated
Experian points out three important things:
- Credit: Info from suppliers and lenders about trade experiences, overdue balances, payment history, and credit use.
- Public Records: Legal issues like liens, bankruptcies, or judgments, and how often they happen, how recent they are, and how much they cost.
- Demographic Info: Information about the company, like size, years in business, and industry type, gathered from state records, credit agencies, and marketing databases.
What Is a Personal Credit Score?
A personal credit score is a three-digit number that shows how trustworthy someone is when it comes to getting loans, mortgages, or credit cards. It’s based on credit history, like active accounts, total debt, and how someone repays. The most common score, the FICO Score, goes from 300 to 850.
Key Factors Affecting Personal Credit Scores
- Late or missed payments hurt your score.
- Keep your credit use below 30% of your limit.
- Having unpaid debt makes your score drop.
- Just paying the minimum can lead to higher interest rates and bad credit habits.
- Applying for a bunch of credit at once leads to multiple hard inquiries, which can lower your score.
- Avoid applying too often, especially right after being turned down.
What Are the Major Personal Credit Bureaus?
Credit bureaus collect, compile, and aggregate data from individuals and lending institutions to provide information about a person’s credit history and creditworthiness. In India, there are four major credit bureaus, all licensed by the Reserve Bank of India (RBI):
- TransUnion CIBIL
- Equifax
- Experian
- CRIF Highmark
- Importance of maintaining a good personal credit score.
Business Credit Score vs Personal Credit Score: Key Differences
| Aspect | Business Credit | Personal Credit |
| Purpose | Measures the creditworthiness of a business | Measures the creditworthiness of an individual |
| Score Range | Varies by bureau; typically 0–100 or custom scales | Standard FICO score: 300–850 |
| Factors Considered | Payment history, credit utilization, business size, and industry risk | Payment history, credit utilization, length of credit history, and credit mix |
| Credit Bureaus | Dun & Bradstreet, Experian, Equifax, FICO Small Business Scoring | Equifax, Experian, TransUnion |
| Impact | Affects business loans, credit cards, and vendor credit terms | Affects personal loans, credit cards, and mortgages |
| Use of Score | Helps secure business funding with favorable terms | Used for personal lending decisions |
| Separate from Personal? | Yes, but small business owners’ scores may be checked | Only linked to individual credit history |
| How to Check | Business credit bureaus’ websites | Credit Karma, bureau websites, and free annual credit report |
Does a business credit card affect your credit score?
Yes, a business credit card can affect your credit score, mainly if it requires a personal guarantee. This means that you are responsible for any loan, so late payment or missing payments can inform the individual credit bureau and damage your score. Some credit card companies share your business card activity with the individual credit bureau, while others only report to the business people. So, checking with the card issuer before applying is a good idea, so you know how your activity will be tracked.
If your business card activity appears on your personal credit report, then things like high credit use or late payment may reduce your score. But timely payment on time can help improve it. If the card issuer does not report to the individual bureau, your business expenses do not affect your credit score. To avoid any surprise, be sure to read the card conditions and reporting policies. Using a business credit card wisely, especially one that keeps individual and business expenses separate, can help you keep both credit scores in good shape.
How to Check Your Business Credit Score and Personal Credit Score
- In India, the major credit bureaus that offer business credit scores are:
- CRIF High Mark
- Equifax India
- Experian India
- TransUnion CIBIL
- You can visit their official websites to request a Company Credit Report (CCR) or Business Credit Report.
- Some bureaus offer free trials, while others may charge a one-time fee for detailed reports.
- These reports give insights into your business’s creditworthiness, payment history, credit exposure, and credit rating—vital for securing business loans and partnerships.
How to Check Your Personal Credit Score in India
- You can check your CIBIL score or scores from other bureaus via:
- TransUnion CIBIL – www.cibil.com
- Experian India – www.experian.in
- Equifax India – www.equifax.co.in
- CRIF High Mark – www.crifhighmark.com
- Many of these sites offer you a free credit report every year. If you need more reports or detailed score analysis, there may be a small fee.
- You can also see your credit score with apps like Credit, Bank Bazar, Pisabazar, and Vishfin.
- Keeping an eye on both your personal and professional credit scores can help you stay financially healthy and avoid any surprises when you are applying for a loan or credit card.
Conclusion
To wrap it up, it is important to know the difference between personal and business credit scores to better manage your finances. Personal scores show how you handle the money, while the business score looks at your company’s credibility. By monitoring both, you can get better debt terms and more credit options, which can lead to long-term financial success. Make it a point to take action regularly to check your score and take action to improve it when needed.
