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Business credit is the ability of a business to qualify for financing without having to use the owner’s personal credit. Businesses have credit reports and scores just like people do. Business credit bureaus Dun & Bradstreet, Experian, and Equifax all keep a record of debt payments and other credit information on businesses.

When done properly, you can get business loans without supplying an

SSN on the application.

This means there is no credit check from the business owner for

approval. This also means that anyone who has bad, even horrible

personal credit can still get approval for business credit.

Business credit reports to the business credit reporting agencies, not

the consumer reporting agencies.

As business credit is used it has no adverse impact on the owner’s

consumer credit because it’s not reported to consumer agencies.

This means using the account, even over 30%, won’t have any adverse

impact on the personal credit scores.

And there are no inquires on the personal credit when you apply for

business credit as long as you don’t supply your SSN.

30% of your total consumer credit score is based on utilization, so if

you use your personal credit to get credit cards for your business and

if you use those cards you will lower your scores. Using more than 30%

of your limit WILL result in a score decrease

If your limit is $1,000, a balance above $300 lowers your scores. This

means 40% of your total score is damaged just by applying and using

the credit you get with your consumer scores. True business credit

affects 0% of your score.

10% of your total consumer credit score is based on inquiries, so

if you are using your personal credit to apply for business loans and

credit, your scores will go down due to those inquiries.15

Those inquiries can stay on your credit for an extended period of time

affecting your ability to borrow more money.

And some unsecured business lending sources won’t lend you money

if you have two inquiries or more on your personal credit reports within

six months.

But with business credit, the credit doesn’t report to the consumer

agencies, so neither inquiries nor utilization have any effect on your

consumer credit scores.

This is one more reason every successful business has business credit.

The main credit score used in the business world is known as a PAYDEX

score provided by Dun and Bradstreet.

This number assess a business’s lending risk much the same as a

consumer credit score reflects a consumer’s individual credit risk.

The exact definition from Dunn & Bradstreet, or D&B is: The D&B

PAYDEX® Score is D&B’s unique dollar-weighted numerical indicator of

how a firm paid its bills over the past year, based on trade experiences

reported to D&B by various vendors.

There are many BIG differences from a business PAYDEX credit score

and an individual FICO credit score.

Consumer FICO credit scores range from 350 to 850. The PAYDEX

Score ranges from 0 to 100. 100 is the highest score you can get.

Having a PAYDEX business score of 80 or higher is very good. It means

prompt payments.

Individual credit scores are calculated based on a number of factors.

The PAYDEX score is calculated based on only one single factor,

whether a business makes prompt payments to its suppliers and

creditors within the agreed upon terms of payment.