Business Credit and Personal Credit --Segment 2

Business Credit and Personal Credit, Never the Twain Shall Meet

Posted on September 26, 2013 by Deborah S. Hildebrand Harris

Oh, East is East, and West is West, and never the twain shall meet –

Rudyard Kipling

Rudyard Kipling said it well when he explained that some things will never unite. In the world of business, we believe that should include your business and personal credit. Here’s why.

The Credit World Today

More than 90 percent of businesses in the U.S. today are small. They have fewer than 25 employees and less than $20 million in annual revenue. Many of these small businesses may have little or no credit history.

While creditors routinely shy away from relying on both personal and business credit when determining the financial well-being of today’s small business owners, more and more lending institutions see them as closely linked, especially when it comes to sole proprietors. The reason, according to Experian, one of the top U.S. credit bureaus (along with Equifax and TransUnion for personal credit and Dun & Bradstreet for business credit), is that when small business owners have problems with personal debt, it’s likely their business will suffer as well.

The reverse is equally valid, however. Combining personal and business credit leaves you personally at risk should your business ever fail. Even so, nearly half of all small businesses use personal credit and debit cards to fund their business. Either way, combining personal and business credit leaves you vulnerable. That’s why it’s important to take the steps necessary to protect both your personal and business credit.

The Strategic Benefit of Knowing Your Business Credit Risk

As a small business owner, managing your credit – be it personal or business – all comes down to periodically monitoring, evaluating, and always protecting your credit. To do this requires due diligence....More