Keeping Commercial Debt Separate from Your Personal Credit
Did you know that generally, business credit and personal credit are not linked? Although there is a relationship between the two, it can be a little confusing. It is best to keep your commercial credit score and/or debt separate from your personal credit. Many business owners have relied on personal credit scores to obtain financing, especially in the business’s early years. This is common and perfectly legal, but can also put everything at risk. Building a credit profile for your new or existing business separate from your personal credit can protect you and access much more credit than you could as a consumer. Good business credit is important to every entrepreneur and business owner.
If you do not separate your commercial debt from your personal credit and your business fails, is sued, or suffers major loss, you can lose your personal savings and personal assets. Filing the necessary paperwork to become a LLC, partnership, C-corp or S-corp, legally protects you and your personal assets from your business. Disconnecting the two can also protect your personal credit score, which is extremely important, and, will save a lot of stress and aggravation around tax time. Loans obtained specifically for business purposes do not typically appear on your personal credit report. Although it is safe to assume your personal credit matters for your business, especially if you are a sole proprietor, and there are times when your personal credit score may be referred to.
You should always monitor and protect your personal and business debt and credit closely. Take the necessary steps to separate your personal and business credit as your business grows. There is no good reason to put your personal assets, credit score, and time at risk. Building your business credit can take some time but is worth it in the long run.
If you find your business in need of debt relief or want to know alternatives to bankruptcy, contact American Finasco. Our team is dedicated to help our clients with debt solutions. Fill out our online form for a free consultation. Contact us today, we look forward to hearing from you.