How is business credit different than personal credit?

 

Business credit is a rating of your company’s history of paying its financial obligations and is based on credit history established under the business’ tax ID number (Employer Identification Number-EIN), NOT the business owner’s Social Security Number. Think of your EIN as the Social Security Number for your business. There are many reasons why you should keep your personal credit and your business credit separate. Many new or small business owners make a common mistake of funding their business through personal lines of credit or credit cards. This behavior could put them at financial risk if the business happens to get in trouble. For example, the bakery owner who uses his personal credit to buy supplies and pay the rent could be personally liable when he hasn’t paid in three months and creditors come knocking on their door.