Personal Credit — REC LLC (2024)

FAQs

Does your personal credit affect your LLC? ›

Lenders will use your personal credit history in determining the terms of any credit they offer your LLC. Over time, however, your LLC will be able to put separation between your personal credit history and and that of your business.

If you don't have a good credit score or don't want to put up a personal guarantee, there are card options that don't require a credit check. Corporate cards generally only require that your LLC is a registered business with a certain amount of money in the bank, with no credit or personal guarantee requirements.

If you have bad personal credit, it might feel like there's no way you can borrow for your business. But your company can have its own separate credit score, so building business credit is possible even if you have other financial issues.

A good credit score for an LLC is typically considered to be in the range of 600–800, similar to your personal credit score. The higher your score, the better it looks to potential lenders and vendors who might want to do business with you.

Most business card issuers require small business owners to sign a personal guarantee, which means you — and your personal credit score — are on the hook.

Unfortunately, if your credit score is below 600, your business funding options are more limited. Certain types of financing, such as invoice financing, do not require a minimum credit score to qualify. Some lenders will also offer equipment financing or a business cash advance if your credit score is in the 500's.

This EIN allows your LLC to open bank accounts, apply for loans, and build credit in its own name. An LLC starts with no credit score. Just like an individual, an LLC must build its credit over time by engaging in responsible financial behavior, such as taking out loans and lines of credit and making payments on time.

Whether you operate as a limited liability company or corporation, your business has the ability to establish a credit file separate from you as an individual. When you register a business (LLC, LLP or corporation) it becomes recognized as a separate legal entity with the ability to enter into contracts.

A business credit score of 80 or personal credit score above 700, along with a reliable source of income, is usually the minimum to secure a business loan. However, some companies don't consider your credit score at all in the underwriting process. These lenders pay more attention to your company's sales and revenue.

The fastest way to build business credit for an LLC is to open a business credit card and make consistent, on-time payments. Additionally, establishing trade credit lines with vendors and suppliers who report to business credit bureaus can help build credit quickly.

Is a 900 credit score possible? ›

Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.

If the LLC goes bankrupt, only the LLC's credit gets hurt -- it won't show up on the credit reports of the members.

General Rule: LLC is Not Liable for Members' Personal Debts

The general rule in all states, including California, is that the money or property of an LLC cannot be taken by creditors to pay off the personal debts or liabilities of the LLC's owners.

Bankers don't necessarily demand good FICO scores to open a business bank account. However, poor scores could bar you from certain credit-based banking services like overdraft protection.

At that time, some find that their personal credit affects their ability to qualify for a business loan. Their loan size they need to scale their business may also be impacted. Entrepreneurs looking to start a business may have to delay their business launch to clean or strengthening their personal credit.

Banks generally require that you have good to excellent credit (score of 690 or higher), strong finances and at least two years in business to qualify for a loan. They'll likely require collateral and a personal guarantee as well.