Personal Credit

Personal credit should be used sparingly when operating a business.  By limiting the use of the business owner’s personal credit in the business, they are able to maintain or even improve their personal score.  It is not necessary to always provide your social security number when obtaining credit in your business name.

In starting and running a small business you are often asked to provide your social security number to obtain credit, leases and even moving into your office.  We have seen small business owners who after just 2 years of starting and running their business saw their personal credit score drop from 730 to 640 with no changes in how they pay their bills and no new personal credit accounts were established.  Had these business owners worked with BCS prior to starting their business or before their scores started to drop, they would have been able to build a business credit score and keep their personal credit where it was to begin with.

Personal credit scores are calculated based on a typical consumers credit habits.  Business owners, however are not typical consumers.  They have more than the average number of inquiries in a year (which is one) and carry more debt than the average consumer.  This automatically works against the business owner and lowers their scores.
The illustration below shows how the use of your personal credit in your business over time will lower your personal credit score and diminish your access to capital when you need it most.

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