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How does my personal credit rating differ from a Business Credit Rating?
Home » Accounting » Business Credit Rating » How does my personal credit rating differ from a Business Credit Rating?Personal credit reports and business credit ratings are similar in at least one sense: both tell potential creditors about the reliability of an individual or business with respect to the repayment of debt. However, in several other ways the two reports are quite different. Personal credit reports are generally opened whenever someone submits their first credit application or takes their first job. In most cases that personal credit report is thereafter updated each time that individual moves, changes jobs, or applies for additional credit. The businesses that loan money to those individuals provide information to the personal credit bureaus, such as Equifax, who in turn provide that information to businesses with whom the individual seeks credit in the future. Over time that personal credit rating becomes a reflection of the individual’s ability to repay debt, and that ability is rated on a scale of 300-850.
Like a personal credit report, your business credit rating also has an acknowledged starting point. As noted above, you begin the process of establishing your business credit rating when you first receive credit from another business, and the information provided by those businesses to the business credit bureaus is the basis of your business credit rating. However, it’s important to note that those business which issue you credit are not required to provide any information to the business credit bureaus; it’s instead a purely voluntary action, so there’s at least a chance that some of your credit history isn’t reflected in your business credit rating. Business credit ratings also use a different scoring system than their personal credit counterparts. Rather than scale business credit ratings between 300-850, business credit bureaus rate businesses on a 0-100 scale (75 or higher is considered an excellent score).
Related Business Credit Rating Articles
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- How can I establish a good Business Credit Rating?
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