We receive a lot of questions about using “blended” data, meaning the use of both business and consumer data when making a business credit decision. First and foremost, you need to have permissible purpose to use consumer data on a business. (Permissible purpose is a set of rules established by the federal government on how consumer information can be used.)
Once you have permissible purpose, you can be authorized to access blended data. Does blended data drive better results? Every study we have done shows it provides improved results.
For example, we looked at 50,000 small businesses that were all paying their bills fine at the start of the study. Four quarters later 18% had seriously delinquent payments. We then looked at the commercial data and consumer data of the business owners. Our objective was to find out whether the business or consumer data would have provided the first warning signal of the delinquent payments.
The results was 54% of the time business data provided the first indication of a slow payment while consumer data provided the early warning 46% of the time. So while business data was slightly more predictive, really it shows both sets of data were needed to be fully effective.