If you've ever used a credit card, opened a bank account, or financed a car, you have a consumer credit file. Your consumer credit information is intended to help you find the money you need to run your household.
However, not every business has a business credit profile, which is one reason why some creditors seek to check the consumer credit information of a small business owner. But if you want to limit your personal liability while running your company, it's best to establish your business credit and use it to run your business.
Using your consumer or personal credit to get money for your business could cause problems, such as:
You may seem overextended. Lending institutions have a certain debt to income criteria for personal credit but not for business credit, because businesses require more cash to operate than consumers do, your personal credit will not be portrayed accurately if you are using it to run your business.
To prevent people from becoming overextended, consumer credit keeps track of how many credit or loan applications you make, most of which count against your personal credit score. On the other hand, business credit doesn't necessarily count applications for financing against you, since businesses usually seek financing on a regular basis as a way of running and growing the business.
Unless you are using the right credit information for the right purpose, you may be putting yourself into a situation where you will be unable to get financing ? for your business or yourself ? when you need it.