What is a good credit score for an LLC?
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 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.
Though you don't need a high credit score to open a business bank account, poor credit history and a track record of negative banking activity could limit your options. If you're concerned about being turned down for a business bank account, shop around for a bank or credit union that doesn't use ChexSystems.
However, if a lender only asks for your EIN, it's likely that they won't look at your personal finances. In this case, your personal credit isn't likely to impact your business credit. Conversely, your business credit can also impact your personal credit. Again, this depends on the lender or creditor's policies.
A minimum personal credit score of 600 is usually required for a business line of credit, though a higher score can help you secure a better interest rate. There are line of credit options for small business owners and larger businesses, each with their own requirements and interest rates.
When you form an LLC and obtain an Employer Identification Number (EIN) from the IRS, you create a unique identifier for your business. 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.
However, over time, your LLC can build its own credit which will allow you to take out loans or credit cards in the name of your business. In fact, establishing credit for your LLC is an important step in running and maintaining a successful business.
FICO SBSS business credit scores range from 0 to 300, with 300 being the “best” possible score, indicating low risk. As of June 2022, the minimum FICO SBSS credit score required to qualify for an SBA 7(a) loan of up to $350,000 is 155, suggesting that a score above 155 is a good target.
Businesses that tend to pay 30 days late get a score of around 50. This is considered fair credit. Paydex range 0–49: Scoring 40 or less means you make payments 60 days past the due date. This is a poor credit score.
The Bottom Line. Business loans help you expand operations, cover payroll, pay for supplies, and manage cash flow. When you have poor or bad credit, finding a lender can be difficult, but there are many loan options available with credit scores as low as 500. This includes loans from online lenders.
Does your EIN have a credit score?
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 lenders and credit card issuers may consider both your personal credit and your business credit, but having a strong business credit score can help you get lower interest rates, higher credit limits and better terms.
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.
Key takeaways
There's no industry-wide credit score requirement for small business loans. Still, a higher credit score of 700 or above generally means you'll be eligible for funding with more attractive terms.
You don't need any particular credit score to start your business as a legal entity, but the lower the score, the more challenges you'll face as a business owner. What are those challenges? Getting loan approvals becomes far more difficult.
It can be challenging for business owners to secure a business loan with bad credit. But even if your options are limited, you may be in luck. Bad credit business loans are often available to business owners with personal credit scores that are considered bad to fair (FICO scores of 300 to 669).
While building a robust business credit report can take as long as three years, most new companies can achieve a top-tier business credit score in 12 months.
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.
Yes, a newly formed LLC can get a credit card, though approval often depends on the business owner's personal credit score, as many business cards require a personal guarantee.
Instead, you pay yourself by taking money out of the LLC's profits as needed. That's called an owner's draw. You can simply write yourself a check or transfer the money for your business profits from your LLC's business bank account to your personal bank account. Easy as that!
Can creditors come after your LLC?
The general rule in all states, including California, is that creditors can't take the money or property of an LLC to pay off the personal debts or liabilities of the LLC's owners. Like corporations, the money or property held by an LLC belongs to the LLC, not the members individually.
What Type of Liability Protection Do You Get With an LLC? The main reason people form LLCs is to avoid personal liability for the debts of a business they own or are involved in. By forming an LLC, only the LLC is liable for the debts and liabilities incurred by the business—not the owners or managers.
The PAYDEX Credit Score rating scale is as follows;
Good Score: 100–80; Payments come up to 30 days early or on terms. Fair Score: 79–50; Payments come between 15 to 30 days beyond terms. Bad Score: 49–1; Payments come between 60 to over 120 days beyond terms.
Experian's business credit scoring system is called the Experian Intelliscore. Its scores range from one to 100 as well. A score of 76 or above is typically considered to be a good Experian business credit score, and 50 to 75 is still considered fair.
For personal credit scores, the ratings range from 300 to 850, with most lenders requiring a minimum score of at least 600 for a personal loan. Business credit scores range from zero to 100 and most small business lending companies require a minimum business credit score of 75.
