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A Personal Credit Score for Business Owners

A personal credit score is a separate number from a business credit score. Here is what each one is, how a personal score is made, and how to see yours.

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Business owners hear about two numbers. One is a personal credit score. The other is a business credit score. They are not the same thing, and they are not built from the same records. The CFPB says credit reports and credit scores play very different roles in your financial health. This page covers the personal side of that pair, and how it connects to your business.

What a personal credit score is, and how it differs from a business credit score

A personal credit score is a number built from your own credit report. The CFPB says credit reporting companies collect and store financial data about you that creditors submit to them. A company then runs the report through a math formula, called a scoring model. The result is your score.

Experian's page on business credit reports says a business score does not affect a personal score. The same goes the other way. The two numbers stay separate.

One more difference matters. The CFPB says creditors are not required to report to every credit reporting company. So one bureau may show more than another.

Why a business owner's personal credit score matters

The CFPB says lenders use credit reports to help decide whether they will loan you money and what interest rates they will offer. It also says lenders use your report to check that you keep meeting the terms of an account you already have.

The CFPB says companies use credit scores to decide whether to offer mortgages, credit cards, auto loans, and other credit products.

Our page on the adverse action notice covers the notice that follows a credit denial based on a consumer report.

How a personal credit score is created from a credit report

The score starts with the report. The CFPB says credit reports often show the date an account was opened and closed and the name of the creditor. They can also contain collection items, missed payments, and loans sent to collections.

A scoring model reads that file and turns it into one number. The FCRA's home loan notice says a credit score is a computer generated summary. It is based on your file, your credit history, and how you pay. The same notice says credit scores can change over time.

You do not have just one personal credit score

There is no single personal credit score that everyone sees. The CFPB says you do not have just one credit score, because each score depends on the data and scoring model used. One lender may use one model. Another may use a different one, or a report from a different bureau.

So two lenders can look at the same person and see two numbers. That is normal. It is one reason a score you check yourself may not match the one a lender pulls.

Your right to see your credit score and the factors behind it

The Fair Credit Reporting Act gives you a way in. It says a consumer who requests a credit file must be told they can request and obtain a credit score. It also says the agency must show you the range of scores the model can give.

Along with the score, you can learn what pushed it. The FCRA calls these key factors. They are the reasons your score is hurt, listed from most to least important. If a key factor involves enquiries that hurt the score, the FCRA says that must be included in the disclosure too.

The FCRA says a contract cannot ban a lender or a reporting agency from telling you your score. Any clause that tries is void. And the CFPB says requesting your credit reports will not hurt your credit score, so checking is safe.

The FCRA's home loan notice tells consumers to review their credit information to make sure it is accurate. If you find an error, you can dispute it with the bureau yourself, for free. Be wary of anyone who promises a fix. The CFPB says a scam company may claim it can guarantee a specific increase in your credit score. No honest service can promise that.

One more thing the FCRA wants you to know. It says the agency that holds your file plays no part in the loan decision. The agency supplies the file. The lender makes the call.

Where to go next: checking your business credit

Your personal score is only half the picture. The other half is the company's own business credit file. Learn how to check my business credit score to see what the business side looks like.

You can also read the business reports the bureaus hold. See what Equifax keeps in a business credit report Equifax. Then read what goes into an Experian one at business credit report Experian. Read each one the way you would read your own report, line by line.

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