Study Correlates Small Business Owners' Personal, Commercial Credit Scores

Experian is set to announce study results today showing a correlation between small business owners' personal credit scores and their commercial credit scores.

Another key finding is that small business owners are 20 percent more likely to be mail-order buyers than the overall population. They are also 50 percent more likely to buy items in upscale and do-it-yourself catalogs, as well as financial services via the mail.

Small business owners in finance, insurance and real estate are most likely to be mail-order buyers, 32 percent more likely than the overall population. Agricultural, forestry and fishing was the next highest category at 29 percent.

The study did not reveal whether these mail-order buyers purchased consumer or business-to-business goods.

Also, small business owners are 54 percent more likely to be receptive to e-mail marketing than the overall population. Highest for e-mail receptivity was the services industry, which includes ad agencies, consulting companies, dentists and doctors. They were 73 percent more likely.

Second highest regarding e-mail receptivity was finance, insurance and real estate, at 59 percent.

Other general findings:

· Small business owners have a 21 percent higher income than the general population and are more likely to live in higher-value homes.

· They are slightly younger than the national average and have longer lengths of residence.

· They are 42 percent more likely to be married, 20 percent more likely to live in male-headed households, 25 percent more likely to have children and 11 percent more likely to be homeowners.

· They are 20 percent less likely to live in the Eastern time zone, but 52 percent more likely to be in the Pacific time zone. They were 16 percent more likely to be in the Mountain time zone and 4.2 percent more likely to be in the Central time zone.

· They have higher education levels across all education attainment categories. They also are more likely to donate to causes than the overall population.

· Hispanics constitute about 6.6 percent of small business owners, but Hispanics are 25 percent less likely to be small business owners than the national average. Asians make up about 2.3 percent of small business owners, but they are 51 percent more likely to be a small business owner.

The study aimed to learn “if there were unique characteristics of the small business owner profile that a business-to-business marketer could use to better understand their target market,” said Denise Hopkins, senior director of Experian's business marketing solutions division.

Experian in August analyzed a random sample of 1 million small business owners from its Business Owner Link database, which offers demographic information on businesses and their owners. Experian defined a small business owner as the CEO, president or proprietor of a business having 25 or fewer employees that isn't a corporation. Some worked at home while others didn't. It then matched those owners to InSource, its consumer demographic database of 250 million consumers.

As a result, “we could apply the consumer profile to the business owner,” Hopkins said. “Then we looked at that compared to the national consumer profile.”

Experian, Costa Mesa, CA, divided the analysis into three sections: an overall demographic profile of the business owner, including purchasing information; a profile by industry; and an analysis of the credit score.

Regarding credit scores, Experian analyzed a random sample of 1,000 owners within the 1 million and appended their consumer credit score and commercial credit score. It also compared the consumer score and the commercial score over a 24-month period. The scores it examined predict the likelihood of a consumer or business going derogatory in the next 90 days.

The study found “a significant positive correlation between the consumer credit score and the commercial credit score,” Hopkins said. “This shows us that there is a carryover between how small business owners approach their finances in both their consumer finances and their commercial finances.”

Hopkins suggested that a blended scoring approach would offer companies the most predictive view of a small business' creditworthiness and risk, helping them make lending, financing and marketing decisions.

“This is an important point when we look at the fact that many small businesses finance their business using some of their personal finances, so blending the data together is going to give you the most predictive view of what's going to occur in terms of a credit perspective on that business,” Hopkins said.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting

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