The Difference Between Business and Consumer Credit

By Walter Nunez & Yhordan Serpentini

Over time as an entrepreneur, you’ll likely come across the terms Business Credit and Consumer Credit; however, what is the difference? Business Credit is built with your business EIN number and Consumer Credit is built with your social security number. Here are a few differences between business and consumer credit.

The Five Factors of Consumer credit

Five factors primarily make up consumer credit scores:

1. Payment History – 35%

2. Utilization – 30%

3. Length of Credit History – 15%

4. Accumulation of New Credit – 10%

5. Credit Mix – 10%

Reaching Superior Consumer Credit

It takes years before you can get a superior consumer credit score. Business credit scores are mostly based on payment history. So, if you have 2-3 reported accounts, and pay bills as agreed or early, you will have an excellent score very quickly. Consumer Credit can only be pulled for a permissible purpose and is highly regulated.

On the contrary, business credit is public information and can be pulled by anyone easily and for a low cost. What does your business credit say about you and your business? How will the public, lenders, competitors, suppliers, and vendors see your credibility? Do not neglect your business credit, it can be a strong reflection of you and your business. For more informational content follow us on our social media platform.