Credit Scores and Credit Market Outcomes: Evidence from the SSBF and KFS

U.S. Small Business Administration Research Paper No. 419

72 Pages Posted: 2 Jan 2014 Last revised: 22 Aug 2018

Date Written: January 30, 2016


This study utilizes data from the Federal Reserve Board’s Surveys of Small Business Finances (SSBFs) and from the Kauffman Foundation’s Kauffman Firm Surveys (KFSs) to provide new evidence on how business credit scoring affects the availability of credit to female- and minority-owned firms. SSBF and KFS data are analyzed using a three-step sequential model of (i) who needs credit, (ii) who applies for credit, and (iii) who gets credit. Analyses of data from both surveys show that firms with lower business credit scores are: (i) more likely to need additional credit because their credit needs have not already been met by past borrowings; (ii) more likely to be discouraged from applying for credit when they report a need for additional credit; and (iii) more likely to be denied credit when they need additional credit and apply for credit. However, when the analyses include a comprehensive set of control variables for firm characteristics, owner characteristics, and firm-lender relationships (SSBF data only), results indicate that business credit scores have no incremental explanatory power over that of the control variables, with the notable exceptions of denial of SSBF firms and discouragement of KFS firms. Moreover, the analyses find no evidence that business credit scores have a disproportionately adverse effect on the availability of credit either to (i) female-owned firms relative to male-owned firms or (ii) to minority-owned firms relative to non-Hispanic white-owned firms. Nor is there any evidence from the SSBF data that business credit scores reduce the importance of firm-lender relationships.

Keywords: availability of credit, credit scoring, discrimination, disparate outcomes, entrepreneurship, small business, SBCS, SSBF

JEL Classification: D82, G21, G32, M13

Suggested Citation

Cole, Rebel A., Credit Scores and Credit Market Outcomes: Evidence from the SSBF and KFS (January 30, 2016). U.S. Small Business Administration Research Paper No. 419, Available at SSRN: or

Rebel A. Cole (Contact Author)

Florida Atlantic University ( email )

College of Business
777 Glades Road
Boca Raton, FL 33431
United States
1-561-297-4969 (Phone)


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