There are three main reporting agencies in the consumer world known as Equifax, Experian, and Trans Union. In the business world Equifax and Experian are still players, but it’s Dun & Bradstreet who is the major player.
In the consumer world the three reporting agencies possess a similar amount of consumer records. This has to do in large part with them splitting up the smaller reporting agencies between them over many decades.
But in the business world, D&B has more than 10 times the records of the next closes reporting agency. So unlike with consumer credit, in the business credit world there really is one MAJOR Player, and two other much smaller ones.
Personal credit scoring is based on 5 main factors, payment history, utilization, length of credit history, accumulation of new credit, and credit mix. These multiple factors make it hard for an individual to really have a lot of control over their credit score.
But in the business world, scores are mainly based on only one factor, how the business pays its bills. If they business pays its bills on time, it is rewarded with a very good credit score. This makes it much easier and faster for a business to build credit than it takes a consumer to do.
A business can actually build a solid credit profile and score within 90 days or less, and can then start qualifying for $10,000 major credit cards within 6 months. In the consumer world, it takes a full 6 months for a credit score to even be obtained, and many years of time for a consumer to get high limit credit cards.
With consumer credit, the consumer is liable for the debt. With business credit the business itself is liable for the debt, not the business owner. Another big difference between personal and business credit is that business credit approvals also are much higher than consumer approvals. On average, approvals are 10-100 times higher on the business side versus consumer side.
These are just some of the major differences between personal, and business credit. Knowing this you can easily see the major benefits any business owner has in having both a strong personal credit profile built, and a strong credit profile and score built for their business also.
You can help business owners obtain money and credit for their business with our TRW Business Finance Solution Program. Let us know how we can help.