Women are More Likely than Men to rely on Personal Credit to Finance their Business

​In an effort to improve financial health, Experian study compares credit behaviors of male and female business owners.
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According to Experian's latest Women in Business report, women are opening businesses at a record pace, but they are using less commercial credit and rely more heavily on consumer credit than men, which may be limiting their personal and business financing options.

The report was released to educate business owners about the benefits of commercial credit use. According to the report, instead of leveraging commercial credit and traditional small-business loans, female business owners are more likely than men to rely on personal credit to expand their businesses. Experian found:

• Female business owners account for 34% of businesses and represent 22% of active commercial credit shoppers
• On average, women business owners have half the number of commercial trades as male business owners and carry approximately $15,000 less in commercial balances
• Women have an average commercial balance of $25,000, while men have an average balance of $40,000

"According to the Women's Business Enterprise National Council, more than 1,800 women-owned businesses are started every day in the U.S, representing significant opportunity for our economy," said Hiq Lee, President Experian Business Information Solutions. "Experian is committed to creating opportunities for small businesses to succeed. With this report, we hope to help women business owners understand how leveraging commercial credit can positively impact their business as well as their financial health."

The impact of relying on personal credit
For some women, the inclination to self-finance their business, is having a negative impact on their personal credit scores. Findings include the following:

• Approximately 28% of female business owners have 10 to 19 consumer trades (credit cards, personal loans, etc.) compared with 20% of male business owners
• 51% of male business owners have a consumer credit score of 750 to 849, compared to 46% of women business owners
• 18% of women business owners have a credit score of 550 to 649, compared to 14% of their male counterparts

The increased amount of personal credit women business owners are using is leading to higher credit utilization rates and consumer trade counts – two factors that can negatively impact credit scores.

"Relying on consumer credit can make it more challenging for women business owners to obtain commercial financing in the future," added Lee. "There is a great need for more education about the impact of relying on personal credit. By developing a greater understanding of commercial credit options, women can grow their businesses more quickly and effectively while protecting their personal credit."

Tips for Improving the Financial Health of Women in Business
Maintaining a business credit profile separate to a personal credit profile can help business owners develop a commercial credit history and protect their personal credit profile. This is especially important should a financial mishap occur with their business.

Experian recommends the following to help both male and female business owners improve and maintain their financial health while growing their commercial credit profile:

• Pay on time: Paying debts on time and according to agreed-upon terms is key to maintaining both personal and business credit histories.
• Explore your options: Business accounts from financial institutions, shipping vendors, lessors, and utility and telephone companies can be established in your business's name, rather than your personal name to help establish and grow a business credit profile.
• Leverage existing resources: Opening a business credit card or a business loan are not the only ways to build commercial credit. Business owners can also secure credit terms from suppliers to help build a business credit profile. It's also recommended to check with your existing lenders and suppliers to see if they report commercial data to Experian.
• Monitor your business credit report: Business owners should regularly monitor their business credit reports and update any invalid information. Business owners can view their Experian credit report by visiting www.Experian.com/mybusinesscredit 

Business owners looking for additional credit education and resources can visit: www.experian.com/small-business. 

Methodology
Experian Commercial Data Sciences analyzed 3.1 million commercial entities included in Experian's commercial credit database from June 2016 to June 2018. The research focused on a sampling of approximately 2.8 commercial entities included in the database.

About Experian
Experian is the world's leading global information services company. During life's big moments — from buying a home or a car to sending a child to college to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 17,200 people operating across 44 countries, and every day we're investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.
​Learn more at www.experianplc.com

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