COSTA MESA, Calif., June 18, 2019 /PRNewswire/ -- 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 today 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:
"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:
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:
Business owners looking for additional credit education and resources can visit: www.experian.com/small-business.
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.
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