There’s a few key differences when comparing business credit vs personal credit. Personal credit is directly linked to your financial past, spending history, and debt repayment behaviors. If you’re a company owner, you also have a business credit profile, history, and financial record. While business and personal credit are connected – the two are actually fairly different. That being said, you should understand the relationship between these two distinctive credit types. This way, you can improve your company’s financial performance, credit score, and overall reputation. To get started now, read on to learn the difference between business credit vs personal credit.
Application Filing And Registration Process
First off, you’ll see different in the application process for business credit vs personal credit. Notably, the application for business credit cards will ask for lots of company-specific information. These applications ask for your business name, industry sector, approximate annual revenue, as well as your corporate structure. You’ll also need to provide your employer identification number (EIN). This is commonly referred to as your tax ID number. Since personal credit cards are designed for induvial consumers, you won’t see these inquiries on the application. Definitely, look for differences in the application process on personal credit vs business credit.
In addition, there are totally different capacity requirements between business credit vs personal credit. In almost every case, businesses will have a much higher capacity for credit. In fact, many businesses can take out loans on-credit for nearly $1 Million. On corporate credit cards, there is often an attached limit of about $55,000. For personal credit, individuals can potentially borrow a maximum of $30,000. Similarly, the average credit limit on personal cards is right around $15,000. If you are looking to establish a capacity for funding, business credit is almost always the way to go. Absolutely, check for different capacity requirements on personal credit vs business credit.
Consumer Protection Laws
When you apply for business credit or personal credit, consider the varying consumer protection laws. Most of the time, personal credit cards have much stronger, hardened consumer protection laws. Personal cards are designed to protect smaller, individual consumers. In many cases, personal cards offer protection against late fees, overdraft expense s, and other random charges. Business credit cards, on the other hand, often do not. Without these laws, you may not be as protected if your business gets sued or stolen from. Indeed, personal vs business credit cards vary in terms of consumer protection laws.
Bonus Categories And Promotional Options
More, there are differences between bonuses, promotions, and perks on business credit vs personal credit cards. On either business or personal credit cards, you’ll see common rewards categories. These are typically associated with spending groups like restaurant, travel, and grocery shopping. On business credit cards, however, you’ll likely find more corporate specific bonuses. This includes savings for multiple phone lines, office supplies, frequent travel, or digital marketing. You may also get food spending perks for corporate meals and employee luncheons. Surely, you’ll see major differences between the available bonuses on personal credit vs business credit.
Fees, Interest, And APRs
Further, you should think about the different fees and interest rates attached to personal credit or business credit cards. Both personal and business credit cards charge interest payments, as well as other ownership expenses. Of course, it is widely known that corporate credit cards often come with more expensive annual fees. These cards traditionally have a bigger yearly charge, as well as a higher APR. If you plan on carrying a debt at some point, this should certainly be a consideration. Certainly, there are major differences between fees and interest on business or personal credit cards.
There are several distinct differences between business and personal credit. First and foremost, these two types of credits offer completely unique application filing and registration processes. In addition, business and personal credit cards have varying capacity requirements. They’ll also differ in terms of consumer protection laws. Moreover, different types of cards have unique bonus categories, perks, and promotional options. Also, the APRs, fees, and interest rates will differ as well. Follow the points highlighted above to learn the difference between business credit vs personal credit.