Male and Female Small Business Owners Handle Credit Differently

Male and Female Small Business Owners Handle Credit Differently

Millions of Americans have become more acutely aware of the ways in which their credit dealings will impact a large amount of their financial lives, but what many may not know is that this is also true of businesses. Consequently, it’s important to look at how smaller companies handle credit, and it seems that there is at least some sort of divide between how male and female entrepreneurs do so.

For instance, the average female small business owner has a credit score of 689, down 10 points from the average male owner’s credit score of 699, according to a report from the credit monitoring bureau Experian. Likewise, their companies tend to have marginally lower commercial credit scores, too, as they average a rating of 34 compared with men’s companies’ average of 35.

“Maintaining a positive credit profile is a powerful piece of advice for consumers and business owners, regardless of gender. Having good credit can make a difference in getting access to funds to help your business grow,” said Peter Bolin, Experian’s director of consulting and analytics. “Without access to this capital, it forces business owners to fund their enterprise through personal loans, which could put their personal credit at risk if the business struggles. This is especially troubling for women-owned businesses, as our research shows their credit scores are lower and take longer to pay their bills than their male counterparts.”

More data highlights potential problems
It should come as little surprise that most small businesses are more or less up to date on making payments, as the average company is only a little more than a week behind on any given credit account, the report said. But the average for women (8.4 days late) is slightly larger than that of men (8.1 days). Interestingly, men seem to also have more access to credit than women overall, as 22 percent of male-owned businesses have at least one account in their name, versus just 18.5 percent of female-owned enterprises.

Owners who want to make their companies look as attractive as possible to lenders may want to consider the benefits of finding ways to cut costs, including those for small business insurance coverage. For instance, if they can do a little more to reduce their expenses for liability insurance, they might be able to save thousands of dollars each year to improve their bottom lines.