The trends of commercial credit reporting on consumer credit
Lenders of small business loans and credit products have several options for how and where they report information about the borrower and the status of the commercial credit product. While reporting, also known as furnishing, is generally provided to business credit reporting companies – including Dun & Bradstreet, Experian, Equifax, and the Small Business Financial Exchange – many small business owners may also find information on their commercial credit products on their consumer credit reports, especially when their accounts are delinquent.
New research released today examines the relationship and trends in commercial and consumer credit for small businesses, with an in-depth look at the frequency and types of commercial credit commonly found on consumer credit reports and the often-inconsistent reporting practices and strategies, which can have significant implications for borrowers.
Reporting commercial credit product on consumer credit reports
Our analysis shows that over 2.8 million consumers have information on commercial or business credit products on their consumer credit report in an average quarter. Between 2012 and 2019, an average of over 1,300 lenders, mostly banks and credit unions, furnished commercial credit information to a nationwide credit reporting agency each quarter. Business credit cards were the credit product most commonly reported on consumer credit reports, followed by business loans, commercial installment loans, and agricultural loans.
Average quarterly statistics for business credit products
The following table includes information on the number of consumers with an open tradeline, number of accounts, and number of furnishers, between Q1 of 2012 and Q4 of 2019.
| Product Description | Consumers (ooos) | Accounts (ooos) | Furnishers |
|---|---|---|---|
Business credit card |
2,326 |
2,545 |
36 |
Business loan |
179 |
154 |
632 |
Commercial installment loan |
129 |
147 |
212 |
Agriculture |
120 |
139 |
354 |
Commercial mortgage |
80 |
62 |
542 |
Business line |
29 |
26 |
46 |
Commercial line of credit |
16 |
11 |
154 |
Total |
2,812 |
3,083 |
1,312 |
Varying credit reporting strategies
Even though the number of tradelines being reported is not low, this is only a small fraction of commercial loans. Our analysis, which compares the number of bank furnishers with the known number of banks with commercial credit on their balance sheet, shows that at least 89 percent of banks are not furnishing any products to consumer bureaus.
On the other hand, furnishers who do report their commercial products sometimes do not report all their business accounts and products to the consumer bureaus or only report information when the account goes seriously delinquent.
This furnishing behavior can have important implications for the consumer credit reports of business owners. Given the variety of reporting strategies, borrowers may not be aware of how commercial credit will affect their consumer credit reports when applying for business loans. Some reporting strategies can also only have negative effects on a business owner’s consumer credit. When lenders only report delinquent accounts, for example, this does not allow business owners to benefit from a satisfactory payment history.
This research is among some of the first to explore the relationship between commercial and consumer credit reporting. It provides a base understanding that can be used to facilitate future research on commercial credit, including changes to reporting over the course of the COVID-19 pandemic.
View full Commercial Credit on Consumer Credit Reports study
This report uses data from the Bureau’s Consumer Credit Panel, a longitudinal sample of approximately five million de-identified credit records maintained by one of the three nationwide credit reporting agencies. It’s also part of the ongoing reporting series, Consumer Credit Trends, where we will continue to examine emerging issues and developments in the consumer credit markets.