The main difference between business credit (also known as corporate credit) and personal credit is that personal credit is all based on the FICO of the owner of the business.  Business credit is based on both the PAYDEX score of the business and the FICO of the CFO of the business.

PAYDEX is like the FICO of a business it ranges from 1 to 100.  The optimum range is near 80. 

Personal Credit affects you FICO score.  Business Credit affects the business's PAYDEX score and has no effect on your FICO.

One of the common misconceptions is that you don't need to personally sign for a business line of credit.  Maybe 5-10 years ago when lenders were tossing money out the windows for businesses that might have been true.  Not any more.  The main difference is that the signer will be the CFO not the business owner.  Also, while the CFO has to sign for the line of credit to open it, if the company performs well then in about 18 months the CFO can generally be taken off the line of credit and the LoC will then be completely on the company.

The interest rates can be very different.  Most personal lines of credit have rates of prime plus 2% - 4%.  A properly set up and managed corporation or LLC can get rates under 6% even in today's market.


While every case will be different, there are several broad categories if things that must be done to get business lines of credit.  I'll outline those categories here and go into detail in further posts.

You need a CFO with a 720+ FICO score.

You need to start or buy a corporation of LLC.  You save a little bit of time if you buy but not as much as you could two years ago.

You need to acquire and use several small sources of business credit (credit cards, merchant accounts, etc.) and use them. In this step, you can acquire $50k - $300k in various small lines of credit (cash and trade credit).

You must show activity in the corporations bank accounts.

Once the corporation is 2 years old, showing activity and using your current business credit to raise your Paydex score to 80, you can start looking for the larger business lines of credit.

Check out the different Business Credit Programs I've found.


For business lines of credit, the key position seems to be the CFO. All of the lenders look at the CFO and the CFO has to sign for any credit (though after 18-24 months the CFO can usually be taken off).

This means that it doesn't really matter what your credit history is.  You just need to partner with someone who has good credit.  Note that the CFO will be responsible for the debts of the company so make sure that the CFO is comfortable with that risk and believes in the ability of the company.

As I stated above,  the CFO is only at risk for the first two years.  After that, if the business is doing well, the CFO can usually get his name off the loan.  That means that this will only be a 2 year risk for him.