What is a Business Credit Score? | CreditShout

What is a Business Credit Score?

By Kevin / July 20, 2011

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Business lenders look at a credit scoring system that is very similar to the one credit card companies look at. A business credit score is important to maintain for any business and determines if the business qualifies for a loan and what rate it’ll receive.

There are quite a few business reporting agencies but one is used more than any other. Paydex, owned by Dun & Bradstreet (D & B), is the number one source for business credit scores available. Paydex scores are very similar to individual credit scores. Both determine if a loan will be given, as well as what rates will be received. Paydex credit scores, however, only take two things into account and are very straightforward and simple. Paydex scores reflect whether a business makes its payments on time and whether it meets payment terms.

Paydex scores range from 0 to 100, with a score of 80 or higher being ideal. Businesses that have a score of 80 meet payment terms all the time, always paying on time. A score above 80 means the business pays their bills early or before they even arrive. A more in-depth view of the Paydex credit scoring system will appear below.

Establishing a great Paydex score is easy. Begin building your business’s credit about 6 months before you need it. Apply for a D-U-N-S number, which is a 9 digit business ID number. Use this number to establish a line of credit with a company that will automatically report to D & B.

You can also establish business credit without the use of Paydex. To do this you’ll be required to list your current creditors as credit references, meaning anyone can contact them. This method is definitely discouraged by lenders, however, and is only mentioned as an alternative.

A high Paydex score is a great benefit to every business because it enables them to qualify for better loan rates and can help customers pay faster. If a customer isn’t paying a bill you simply report them to Paydex; this usually gets results.

Maintaining a great Paydex score is easy; simply use your credit account frequently. Because your score is based on your payments, failing to use your acount for a long period of time means there are no payments to look at, causing your score to drop. Continuous activity is all you need to maintain a good Paydex score once you already have it.

Paydex Score Chart
100: Payment received early
90: Payment arrives during early payment discount period
80: Payment received on time.
70: Payment received 15 days late
60: Payment received 22 days late
50: Payment receive 30 days late
40: Payment received 60 days late
30: Payment received 90 days late
20: Payment received 120 days late
0: Payment information not available

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