Personal credit and business credit

On this page

• Your personal credit stays in the loan file
• SBA sets no minimum score, so each lender decides
• Business credit is a separate file
• What moves a personal score
• Lenders read your personal financial statement too
• A score gap changes the total cost
• What to fix first, in order
• You can ask why a lender said no
• When these moves are a bad idea

Your personal credit stays in the loan file

Lenders read your personal credit even on a business loan, because owners usually guarantee it. Owners with 20% or more of the business generally must guarantee an SBA loan (13 CFR § 120.160(a)). On a Standard 7(a) loan the lender must review the personal credit reports of owners and guarantors. It must also discuss any credit issues (SOP 50 10 8.1, Sec. B, Ch. 1, Para. C.2.a). The personal guarantees guide explains what you sign.

Personal guarantees are common beyond SBA lending. In the Federal Reserve's 2025 survey, 59% of firms with debt had secured it with a personal guaranteepersonal guaranteeYour promise to repay the loan yourself if the business cannot. . 38% had pledged the owner's personal assets, up from 31% in 2019.

SBA sets no minimum score, so each lender decides

Two SBA rules shape how scores are used:

• Minimum score. SBA sets no minimum credit score; the lender applies its own credit standards.
• FICO SBSS score (SBA Procedural Notice 5000-876777). It was discontinued for 7(a) Small loans effective March 1, 2026; lenders use their own commercial credit analysis, and scoring models are optional.

Each lender decides what credit history it accepts, and policies vary by lender.

The Federal Reserve survey shows what applicants cite. Some were not approved for part or all of the financing they sought. The top reason, at 46%, was that lender requirements were too strict. Next, 37% cited too much debt already and 30% cited a low credit score. Another 29% cited insufficient collateralcollateralProperty a lender can take and sell if a loan is not repaid. and 29% cited weak sales. Too much existing debt was cited more often than a low credit score.

Business credit is a separate file

Business credit is a separate file from your personal credit. Dun & Bradstreet, Experian and Equifax each issue business reports (SBA, Establish business credit). SBA notes that loan eligibility for a new business is typically based on the owner's personal credit score. An established business has a history of its own, and lenders weigh it with yours. See business credit scores for how the agencies score a company.

Check both files before you apply. Each nationwide bureau gives you a free personal report every week through AnnualCreditReport.com, the only authorized source (FTC). Business reports come from the commercial bureaus. If you find an error, dispute it with the bureau and with the company that supplied the information (FTC).

What moves a personal score

Three points from the CFPB bear on a loan application. Most credit scores treat repayment history as the number one factor, so paying on time matters most. Many experts recommend using less than 30 percent of your total credit limit. Applying for many accounts in a short span can look like financial trouble to lenders.

The Federal Reserve survey sorts firms by credit risk. It calls a personal score of 720 or higher low risk. A score from 620 to 719 is medium, and below 620 is high. Those are the survey's labels, not any lender's rule.

Lenders read your personal financial statement too

Your personal financial statement goes into the file with your credit reports. Each owner of 20% or more, and each proposed guarantor other than a supplemental guarantor, completes one. SBA Form 413 or the lender's own equivalent form works. It must be signed and dated within 90 days of submission to SBA (SOP 50 10 8.1, Appendix 20, Para. A.1.c).

The statement lists what you own and what you owe. A lender reading it beside your credit reports will notice a debt that appears on one and not the other. Make them match.

A score gap changes the total cost

A score gap changes what you pay. Suppose a lender quotes 9% to a borrower with strong credit and 12% to one with weaker credit, each for $150,000 over 7 years. These are assumptions for the arithmetic, not quotes.

• At 9%: about $2,413 a month and $202,722 in total.
• At 12%: about $2,648 a month and $222,424 in total.
• The gap: about $235 a month and $19,702 over the loan.

SBA caps the variable rate at Prime plus 3.0 to 6.5 percentage points, depending on loan size (13 CFR § 120.214). Within that cap the lender sets your rate, and your credit is part of how it decides.

A few months spent correcting errors and paying down card balances can narrow a gap like this.

What to fix first, in order

Work through these steps before you apply:

1. Pull your personal reports from AnnualCreditReport.com and read every line.
2. Dispute errors with the bureau and with the company that reported them.
3. Bring card balances below 30% of your total credit limit where you can.
4. Make every payment on time from now on.
5. Write a debt schedule of every business and personal debt, with its balance and payment.
6. Get your business reports and check them for errors too.

You can ask why a lender said no

Regulation B gives a denied business applicant a right to know why. Your gross revenue in the last fiscal year matters. At $1 million or less, the lender must tell you about your right to a statement of specific reasons. Above $1 million, you must request the reasons in writing within 60 days (12 CFR 1002.9(a)(3)).

Ask. The reason may be a credit score, a debt level or a missing document. Each one tells you what to fix before the next application.

When these moves are a bad idea

• Applying everywhere at once. Compare two or three offers in writing instead. Every application puts your personal reports in front of another lender.
• Signing a guarantee you have not read. An unlimited personal guarantee puts personal assets behind the loan. SBA's guarantee protects the lender, not you. See the answer on what the SBA guarantee covers.
• Running business spending through personal cards. SBA refinances card debt only if you certify that it was used exclusively for the business (SOP 50 10 8.1, Appendix 14). Mixed spending makes that certification hard to give.
• Expecting business credit to carry a new company. For a new business, personal credit usually decides the loan.