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How are Business Credit Cards different than personal credit cards?
Home » Accounting » Business Credit Cards » How are Business Credit Cards different than personal credit cards?When an individual begins to work at their first job, apply for a Social Security number, and begin to make use of the purchase power a paycheck creates, businesses begin to keep track of that power. That rating is commonly known as a “credit rating,” and is a grade that shows the ability of that individual to pay back their debt.
Business credit is recorded in much the same way, but with a different rating system, which is filed under the business name, not the name(s) of the owner(s). Instead of a Social Security number of an individual, business credit bureaus keep track of business credit ratings through the business’s Federal Tax ID number.
Personal credit ratings range from 300 to 850, while business credit ratings are scored on a scale from 0 to 100. A business credit score is considered excellent if it falls near a rating of 75 or 80, while a personal credit rating is considered excellent at about 675 or 80.
The two forms of credit are very similar in use, but should always be kept separate. Using personal information to apply for a business credit card will result in both personal and business transactions being recorded under your personal credit score. Since the number of entries recorded usually means a lowering of the score, it would stand to reason that both personal and business credit scores would end up with a better rating if kept separate.
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