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.
