Experian Study Highlights Relationship Between Business and Consumer Credit Scores

Experian®, a global information solutions company, today announced the results of a comprehensive study that examines the correlation between a small-business owner’s personal credit score and his or her commercial credit score.

Both scores were studied to highlight which is a leading indicator of determining risk or the overall creditworthiness of a small business. The study also researches the association between the personal payment behavior of a business owner and the payment behavior of the business itself. For the report, Experian compiled a sample of more than 50,000 small businesses and analyzed the information each quarter over the course of four years. To complete the study, Experian leveraged proprietary data from its Business Owner Link database, which makes the connection between small- business owners and their home address. Experian is the only company offering this unique look into the small-business marketplace.

The study found that credit scores that blend business and consumer information offer companies a more predictive view of small-business risk, helping them to make important lending, financing and marketing decisions.

A sample of the study’s research includes the following:

• Examination of whether a small-business owner allows his or her personal credit to suffer in order to protect the business or if the owner allows the business accounts to become delinquent to protect personal credit
• Analysis of personal and business credit activities measured by size of the business or number of employees
• Illustration of personal and business credit issues by business age

“When it comes to evaluating the creditworthiness of a small business, our industry continues to debate whether the owner’s personal information or the business’s information is the best indicator,” said Mark Zablan, president, Experian’s Business Information Solutions group. “This Experian study provides lenders and credit grantors with a clear understanding of the different scoring options available and helps them identify the best method for predicting early indications of trouble.”