Does LLC have a credit score? (2024)

Does LLC have a credit score?

An LLC can establish its own credit score, distinct from the personal credit scores of its owners. When you form an LLC and obtain an Employer Identification Number (EIN) from the IRS, you create a unique identifier for your business.

Yes, your LLC can have a credit score, often referred to as a business credit score or a business credit rating. Business credit scores are separate from personal credit scores and are specific to the financial activity of the LLC. These scores are typically maintained by business credit bureaus.

While a business credit history isn't typically required to get a credit card, most credit card issuers will perform a personal credit check and ask you to sign a personal guarantee, making you as the business owner personally liable for any debt on your card.

Free options to check your business credit score include: Dun & Bradstreet CreditSignal. This free service from Dun & Bradstreet allows you access to your business credit score, with notifications when your credit score changes and how to improve it.

It can take a new business up to three years to build a strong credit score. If you're just getting started, it's important to know that companies with an established history of timely payments and responsible financial management may be able to develop their credit faster than those with no history.

Benefits of Having Business Credit With an LLC

Building good business credit for your LLC can help you qualify for future loans and lines of credit, as well as open up more opportunities for financing because some lenders won't lend to sole proprietorships.

While your personal credit score is tied to your Social Security number, your business credit score is tied to an Employer Identification Number — or EIN. This helps you keep your personal financial information private while you build and maintain your business credit score.

Some businesses may be approved right after applying. Some businesses may have to wait a few days to a few weeks for a decision. Applying online speeds up the approval process because it's the most streamlined application method.

What If an Applicant Doesn't Have Business Revenue Yet? Not having any business revenue yet is not necessarily a deal-breaker on a business credit card application. Applicants can enter $0 as revenue as long as they are able to list personal income later in the application.

You need a personal credit score of 700 or higher to qualify for the best business credit cards. The exception to this rule is corporate cards, which usually don't check your credit score. Instead, these cards require that you have a certain amount of capital in a business bank account.

What is the highest business credit score?

Equifax's Business Credit Risk Score ranges from 101 to 992, with 992 being the highest score you can obtain. There's no agreed upon number on this scale that indicates good business credit, but as with the others a higher score is better.

In most cases, a card issuer will check your personal credit report and score when you apply for a new business credit card. This is known as a hard credit inquiry, and it can have a small but temporary negative impact on your credit score. Hard inquiries may impact your FICO® Score for up to 12 months.

It's entirely possible to sign up for a business credit card using only your EIN, but it will have to be a corporate one. Corporate cards are the only type of business credit cards that only require an EIN. They're intended for established companies and usually come with high revenue and cash-on-hand requirements.

Forming an LLC or corporation creates a separate legal entity with its own credit score different from the business owner(s) 's personal credit score. This differs from sole proprietorships and partnerships, where the business's credit is tied to personal credit profiles.

After completing the steps to legally organize a new business, it is important to establish a separate line of credit through that business. Doing so protects the assets and interests of the business owner while also strengthening the value of the new company.

If your LLC has debts taken out in the company's name, only the LLC's business credit report will be impacted by whether you repay your debts on time. An LLC loan will only impact your personal credit if you cosign or guarantee it. If you don't do so, your credit report will remain unaffected.

Yes, it can be easier to get an LLC loan. Some lenders won't lend to sole proprietors.

Available loan amounts depend on the lender but typically range from $2,000 to $250,000. Because you don't pay interest on the full amount and only on what you use, it's acceptable to ask for a higher limit than you'll likely need—as long as you don't get greedy and spend more than you can afford.

Can I Get a Loan with Just My Business EIN? Yes, there are certain circ*mstances where a lender will not use your personal credit score, but only your EIN as a factor in lending to you. Note that they won't just use your EIN in isolation, as there are many factors that go into qualifying for a small business loan.

How long does it take to build credit on EIN?

Business credit building is a process. But it doesn't have to take forever. You may be seeing figures like three years thrown around. While it can be helpful to be in business for that long, you can build a good business credit profile and score long before that.

An EIN is not linked or associated with your SSN. As such, it provides additional personal privacy protection by using a different number than your SSN for reporting purposes. You can easily apply online for the EIN through the IRS. In addition to privacy, there are other advantages to obtain an EIN.

It's not hard to get a credit card for a new LLC. Issuers will mostly rely only on your personal credit history and personal income when evaluating your small business credit card application, so the length of time the LLC has been in business will have little effect on the LLC's approval odds.

Don't be surprised if it takes two to three months to see the fruits of your efforts. Business credit card activity can take between 30 and 60 days to report, and vendor activity can take anywhere between 60 and 90 days.