Credit for your business

They are two different profiles

Your business can have its own history, separate from yours. Many small business owners never build it and end up financing everything with their personal cards.

• Personal credit: identified by your Social Security number; reported by Experian, TransUnion, and Equifax; you are personally responsible; checked by lenders and landlords
• Business credit: is identified by the business EIN; reported by Dun & Bradstreet, Experian Business and Equifax Business; the business is responsible if there is no personal guarantee; checked by vendors, banks and insurers

Financing the business with personal cards drives up your personal utilization and, if the business has a bad month, the damage goes straight to your personal credit. Separating them protects your financial life from the ups and downs of the business.

The foundation to set up first

• Registered legal entity: an LLC or corporation. As an individual there is no way to separate the two.
• EIN: the business tax identification number, which you can get at no cost on the IRS website.
• Business bank account, separate from your personal one. It is the requirement most often skipped and one of the most important.
• Business address and phone number, consistent everywhere.
• D-U-N-S number, issued by Dun & Bradstreet and is the main identifier for business credit.
• Verifiable presence: a website with a domain email and the business listed in directories.

The detail that sinks applications: the business name, address, and phone number must be written exactly the same in the state registry, the bank, the D-U-N-S record, and every application. A different abbreviation or a missing “LLC” can keep them from finding you in the system.

How the history is built

Business credit does not start with cards, it starts with suppliers:

• Supplier accounts that sell on 30-day terms and report to the business credit agencies. This is the entry point.
• Store and fuel accounts, for office supplies, materials, or gas stations, which tend to approve with little history.
• Business credit card, once a few accounts are reporting. At the beginning they almost always ask for a personal guarantee.
• Bank financing: lines of credit and loans, where they also look at the business financial statements.

The key: before opening any account, ask “do you report to the business credit agencies?” If they do not report, you are not building history, no matter how on time you pay.

The personal guarantee

At the beginning almost all business financing requires a personal guarantee: you answer with your assets if the business does not pay. That is why your personal credit still matters even if you apply in the business name. The reasonable order:

• First, put your personal credit in order and strengthen it.
• In parallel, set up the formal foundation of the business.
• Then, build business history with suppliers.
• Over time, access financing without a personal guarantee.

Beware of “credit with no SSN” promises

Offers circulate to get large business financing without checking your personal credit or requiring a guarantee. For a new business with no history that is almost never real, and some of those structures cross into illegal territory. Business credit is built with time and consistency, just like personal credit.