Do you have a Paydex Score?

You probably have personal credit scores established, and you are probably familiar with Equifax, Experian, and TransUnion. But do you have a Paydex business credit score yet?

The main credit score used in the business world is known as a Paydex score provided by Dun and Bradstreet. This number assesses a business’ lending risk much the same as a consumer credit score reflects a consumer’s individual credit risk.

The exact definition from Dunn & Bradstreet, or D&B is: The D&B 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.

But the key to this definition is “based on trade experiences reported to D&B”. Only approximately 10% of creditors actually report to any of the major business credit agencies. Only 10%. That means you're only building your business credit using 1 in 10 of the credit that you actually obtain!

There are many BIG differences from a business Paydex credit score and an individual FICO credit score. Consumer FICO credit scores range from 350- 850. The Paydex Score ranges from 0-100 with 100 being the highest score you can obtain. While a consumer credit score take a number of factors into consideration, Paydex is calculated based on only one single factor – whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment. This means, you can establish a great business credit score much faster than establishing a great consumer credit score. Also, in order for DnB to calculate a Paydex score, your company needs at least four payment experiences reporting on your company’s Dun and Bradstreet credit file. Just because DnB found your company and assigned you a Duns Number does NOT mean you have a Paydex score.

Having a Paydex business score of 80 or higher is very good, as scores below 70 are not. Individual credit scores are calculated based on a number of factors. The Paydex score is calculated based on only one single factor; whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment. For example, prompt payments will produce a Paydex score of 80. A 70 score reflects paying 15 days behind, 60 score is 22 days behind, a 30 score reflects paying 90 days behind, and a 20 Paydex reflects paying bills 120 days late.

If you own a business, your Paydex score is essential in establishing new credit and continuing to build credit limits exceeding $100,000.

Call us to start the process of establishing your Paydex score and getting approved for $50,000 in business credit with no personal guarantee and regardless of your personal credit quality.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Finance Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com.

Experian Business Scoring

 

Dun & Bradstreet is the primary company used to evaluate business credit and issue a credit score known as a Paydex score.

There are also other companies that provide similar credit evaluation services to businesses based on their independent databases. One of them is Experian's Business Credit Division who offers a credit score known as an Intelliscore.

Experian is one of the three major consumer credit rating bureaus, but also provides business credit evaluations for over 27,000,000 small businesses and corporations. Experian's model is designed for companies that provide goods and services to small businesses.

Some of the items listed on Experian's reports include Business credit scores and credit summary, Key facts about the business, Corporate registration and contact information, Summaries of collections and payments, Uniform Commercial Code filing information, Banking, insurance and leasing information, Bankruptcy filings, Judgment filings, and Tax lien filings.

The Experian Intelliscore ranges from from 0-100 with a lower score indicating a higher risk for serious delinquency.  The 0-100 is a percentile score that reflects the percentage of businesses that score higher or lower than the specific business being looked at. For example, if the business has a score of 20, this means that company scores better than 19% of other businesses.  That also means that 80% of other businesses score higher than that business.

Payment status on commercial accounts is treated much differently than personal accounts, and this accounts for about 50% of an Intelliscore. On the personal side, a consumer has 30 days after a payment is due before a late payment can be reported on their credit. But on the commercial side, a creditor can report a late payment the day after it's due.

Approximately 15% of  an Intelliscore is based on the amount of derogatory items and public records. Liens, judgments, bankruptcies, UCC filings and other derogatory items indicate that your company has had financial trouble in the past. Before letting a bill or credit obligation get to the courthouse, see if there is an alternative that might work. Reach out to the person or company that you owe money to and see if some sort of arrangement can be worked out. If you are dealing with a collection agency or other company, they may be willing to work out a settlement with you. It's almost always more efficient for them to work with you directly than through the courts.

Approximately another 15%  is based on Credit Utilization; specifically, the ratio of account balances to recent high credit balance, the ratio of delinquent balances to credit limits, and balances carried in relation to the rest of businesses in the same industry. Since many business credit accounts don’t have credit limits, this ratio is used as an indicator of how much financial stress a business might be experiencing. The assumption is that the closer a business gets to its highest historical debt amount, the more difficult it could be for that business to make its payments on time.

Approximately another 10% of the score is based on Payment Trends. They are also a part of the overall payment status factor that accounts for 50-60% of your score. If you are paying your bills increasingly late, your payment trend will show that your average DBT is increasing, and your score could take a hit. In contrast, paying your bills on time or early will lower your average DBT and improve your score. Slow or late payments trends, as well as total number of delinquent accounts are the most important factors to consider within the payment status category. Days Beyond Terms (DBT) indicates how many days beyond terms your bill payments are. In consumer credit, a bill is considered late when it is at least 30 days overdue. But in business credit, there is a wide variety of payment terms such as Net 30, Net 60, etc. So, for example, if a business is supposed to pay its bills within 60 days and the business pays on day 67, the DBT is 7. Your business credit will be negatively impacted the higher your DBT is.

Approximately the last 10% of your credit score is based on Company Information. This is related to your business’s industry type, and is especially important because certain industry types are automatically considered high risk. Make sure this information is correct so your business is not being categorized in the wrong industry. Additionally, information such as how long you have been in business, number of employees, business owners, and contact information is listed here. This information needs to be accurate and congruent with any application for financing. If a bank or other lender is told your business is in a certain industry but then checks your business credit and a different industry is listed, it may well result in a decline. Ensure your SIC and NAICS codes are correct

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Financing Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com.

5 Factors That Affect Your Business Funding Approvals

What gives you the best chances of getting a BUSINESS loan or credit? Here are a few factors that play into your business credit picture, and what you can do to make the most of them.

1.    Payment History - Just like your personal credit, your business payment history is an important part of your business credit profile. It is what your D&B Paydex score and other business credit scores are based on. Many credit opportunities come with a minimum Paydex requirement. What you can do: always pay vendors EARLY.  On time is okay, but paying early (as in before you receive the invoice) is best. MAKE SURE YOU HAVE EXCELLENT BUSINESS CREDIT SCORES WITH THE PRIMARY BUSINESS CREDIT REPORTING AGENCIES.

2.    Credit Applications - Believe it or not, multiple applications for credit can be a red flag that will keep you from getting approved for a loan. Too many in a short period of time will make your company look desperate and be a sign to potential lenders that things are going downhill. What you can do: plan your use of credit accordingly, and keep applications to the minimum necessary to accomplish your goals. This is where you will greatly benefit from our services. You’ll know what the underwriting requirements are BEFORE you even apply.

3.    Blanket UCC Filings - One thing that many people don’t realize is that they need to pay attention to the order in which they get certain types of loans, and what UCC filings some lenders will file. Some lenders may file a “blanket” UCC filing, which essentially says they have an interest in ALL of your assets. These blanket UCC filings will then take precedence over any subsequent ones, which drastically reduces your ability to get credit elsewhere.

What you can do: plan your credit carefully, and negotiate UCC filings according to what your needs are. For example, if you need particular assets excluded from a UCC filing to use as security for another loan, explain that fact in advance to get those items excluded from any blanket filings, or, alternatively, get the loan or account with the more specific UCC filing first. Some experts recommend opening accounts with competing UCC filings at the same time, and negotiating the details with each party simultaneously.

4.    Company Financials - With D&B, it’s important to make sure your financials in your credit file are up to date. If they are not, it could negatively reflect on your company when the lender is comparing the available data. What you can do: update your financials on your credit reports so that they reflect your current circumstances, and plan to do so periodically.

5.    Company Legal Structure - The legal structure of your company (LLC versus INC versus Partnership, etc.) can also affect your business credit. Lenders are less likely to loan money to Sole Proprietorships and Partnerships than Corporations or Limited Liability Companies.

What you can do: if you aren’t incorporated, you should be. The advantages span far past just your ability to get credit.

There are other factors that affect your ability to get credit, such as the amount of debt your business already has, how heavily invested you are in your company, and even your personal credit can play a role in your approval or denial. Here we’ve covered five of them. In the end, the better the all-around picture you can paint, the better your chances of getting approved for loans will be.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Financing Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com.

You Don't have to use your Personal Credit for your Business - and you Shouldn't!

 

Most business owners quickly get accustomed to using their personal credit and personal guarantee for their businesses. As a result, most never realize that it IS possible to obtain considerable credit for their business with no personal guarantee or personal credit inquiry – even higher limits than using their personal credit to qualify.

We are a business credit and funding service company dedicated to helping business owners build positive business credit profiles, and then use those profiles to obtain substantial amounts of usable credit. We also can help you repair your personal credit to double your credit options.

We will help you get approved for $50,000 at a minimum - guaranteed. Even if you have horrible personal credit, you could still qualify for $50,000 or more in real usable credit.

If you don’t have a business credit profile created yet, we will help you establish your free D&B DUNS number and start the establishing of your credit profiles. Next, we strategically help you get approved for new credit accounts which are much more flexible than if you used your personal credit, and that report to the appropriate business credit reporting agencies therefore building your business credit profile. After only a couple of months of using those credit items and paying on time, you will start to establish your business credit scores. We will then quickly start qualifying you for credit on revolving terms.

Within a few months you will start qualifying for credit lines with major retailers such as Dell, Home Depot, Office Max, Staples, Sears, Apple, Best Buy and many more. You will also have an excellent business credit score established. Within a year you will be on your way to even more business credit. These cards can be used at any stores just like a normal credit card. It is very realistic that from one year and on, you will continue to qualify for high credit limits in your business’s name with no personal guarantee. Many of our clients continue on to qualify for $100,000 or more in real credit in their business name. All of this is possible for you and your business, with no personal guarantee and no personal credit check.

Call us today to learn more about getting approved for $50,000 in business credit with no personal guarantee and regardless of your personal credit quality.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Finance Suite as well as consumer credit restoration and optimization services. www.ExpertCreditConsultants.com.