Paydex Score

What is Paydex Score?

According to wikipedia,

Paydex is a term used in business, for a numerical score granted by Dun and Bradstreet to business as a credit score for the promptness of their payments to creditors.

Individual credit scores and Paydex score are similar in a way that both are used to determine whether you'll get a credit and on what terms.

It's the business equivalent of your personal credit score.

While individual fica credit score take a number of factors into consideration, Paydex is calculated based one single factor - whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment.

Paydex Score Chart

 
 
100
Early
90
Early
80
Prompt
70
Late by 14 Days
60
Late by 21 Days
50
Late by 30 Days
40
Late by 60 Days
30
Late by 90 Days
20
Late by 120 Days
UN
Unavailable

According to Dun & Bradstreet (D&B), the Paydex score is

D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors.

The Paydex Score ranges from 0 to 100 with higher scores indicating better payment performance.

A score of 80 and above is considered favorable - that is they pay on time. Most lenders and suppliers are looking for a score of 70 and higher.

How to Establish a Paydex Score?

As a rule of thumb, it's a good idea to establish your Paydex score at least three to six months before you plan to get a loan.

You can apply for a D-U-N-S® number - a nine-digit business identification number - and use it to establish a small line of credit with a company that automatically reports to D&B.

A D-U-N-S® number enables potential customers, suppliers and lenders to easily verify the credibility of your business and make it easier for them to do business with you.

It is said that D&B will not assign a Paydex score for your business until at least 4 different companies have reported your payment history.

Simply put, your businees will get no credit for paying on time if your creditors don't report to D&B.

How to Raise Your Paydex Score?

The best way to raise your score is to frequently pay all of your bills early whenever possible. For instance, to raise your score beyond 80, you must pay ahead of time since paydex score is directly related to how you pay your bills.

In other words, if your creditor gives you 30 days to pay, make an effort to pay 10 days in advance. Such practice will push your score above 80.

Since Paydex Score is a measure of your credit business worthiness, it's obvious that you need to build your score early and keep it high at all times - especially so if you're a small business owner in need of business financing.

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