Know Your Numbers

What a credit score actually is

A credit score is a number between 300 and 850 that lenders use to guess one thing: if they give you money, will you pay it back on time? The higher the number, the more they trust you — and the cheaper they lend to you.

There are personal scores (FICO, VantageScore) and a whole separate world of business credit. Most young founders never learn the business side even exists.

The five things that move your score

Every point comes from five buckets. Master these and nothing about your score is a mystery:

• Payment history (35%) — do you pay on time, every time? This is the biggest lever by far.
• Utilization (30%) — how much of your available credit you’re using. Keep it under 30%, ideally under 10%.
• Age of credit (15%) — older accounts help. Don’t close your first card.
• Credit mix (10%) — a healthy blend of cards and loans.
• New inquiries (10%) — applying for a lot at once looks desperate. Space it out.

Personal vs. business credit

Your personal credit is tied to your SSN. Your business credit is tied to your EIN — a separate file that a company builds on its own. Done right, your business can borrow without putting your personal credit on the line. That separation is the whole game, and it’s covered in Get Funded.

How to build from zero

No history? That’s a starting line, not a wall.

• Pull your reports free at AnnualCreditReport.com — the only federally authorized source.
• Open a secured card or become an authorized user on someone’s seasoned account.
• Put one small recurring bill on it and autopay it in full every month.
• Keep utilization low and never miss a due date — set alerts.
• Be patient. Age is a factor you can only earn with time.