Keep Your Personal And Business Credit Separate

Business Credit
Reading Time: 2 minutes

There are certain truisms when it comes to finances. Don’t bite off more than you can chew comes readily to mind. So does separating your business and personal credit.

If you’ll recall, we gave you this advice in condensed form back in July, when you were probably distracted by “the beach” and “the warm weather” and “the unholy swarm of black flies endlessly circling and biting” “you.” Here it is again, in case you did miss it:

Separation of business and home: Don’t get your personal finances tangled up in the business. Get a license, file separate tax returns for the business and get a separate phone number and business address. Do anything you can, in other words, to make it clear that the business you’re running is not a personal business, but a lean, professional operation.

Given that rather off-handed mention, you may wonder why it’s so important to keep the two separated. As I alluded to in the paragraph above, you want to project the image of a highly professional business. You can do so in every aspect of your company’s daily life and still be tripped up by the ghost of bad credit past. That’s why it’s worth doing.

For example, let’s say you apply for a business loan. The lender you apply with finds your business credit excellent. But they review your personal credit as well, because you have had it tied up in your business since the start. They find you’ve made late payments and even had a collections agency hounding you due to missed payments. While that may be in the past and it may well have nothing to do with your business, it raises serious doubts about your ability and/or willingness to make timely payments. That, in turn, affects your entire loan application.

So keep it separate. Don’t have anything to do with your personal finances in your business and you’ll avoid a host of headaches down the line, ensuring your business and its squeaky, silvery credit rating remain intact.

Do you keep your personal and business credit separate?


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