The Secret to Your Paydex Score

When applying for small business credit your Paydex score is probably the most important factor looked at by lenders. A Paydex score is your business version of a personal FICO score. It is a score generated by the reporting firm Dun and Bradstreet that reflects your history of paying vendors and other lenders on a timely basis.

If your business credit has a high enough Paydex score your company may instantly qualify for significant vendor credit as well as business credit cards, equipment financing, bank loans and lines of credit. If your business does not have a good Paydex score you will have trouble establishing new credit and existing credit lines can be in peril.

Your Paydex score is compiled by D and B through ongoing payment input from vendors that report if you pay early, on-time or make late payments. The Paydex system ranks businesses on a scale of 0 to 100. A zero score is the lowest and a 100 score is the best possible rating.

Any Paydex score over the level of 80 indicates a business that pays its bills on time. Small business owners should focus heavily on keeping their Paydex score at or above the 80 level. New businesses need to get their score established at the earliest opportunities.

Raising your Paydex score is not as complicated as raising a personal FICO score.

A) Your Paydex score is based solely on your payment history to reporting lenders. By sorting out your reporting vendors from non-reporting vendors you can quickly increase your Paydex live skor  score simply by paying those vendors early. By paying the reporting vendors ten days before their invoice is due your Paydex score can climb significantly. Since your Paydex file shows that you are paying reporting vendors ten days before due date, it is calculated that you are paying all of your vendors that way, even if you are paying non-reporting vendors on their normal terms. By selectively paying certain vendors early you can increase your score without hurting cash flow. Within a few months your score can be very, very good.

B) Here is what your Paydex score means:

The scores directly relate to your payment history as follows:

If your score is 100 (almost impossible to achieve) it means that you pay your invoices often before they even arrive in the mail.

If your score is 90 it means that you are paying early enough before the due date to take advantage of any discounts or incentives that vendors offer for early payment.

If your score is 80 or higher it means that you always pay your invoices on time. Not often early and never late. Just on time. This score is the target for most businesses.

If your score is 70 it means that your vendors are reporting that you pay about two weeks after the invoice is actually due, commonly considered paying in the “grace period.”

If your score is 60 it indicates that you run late on paying your bills but rarely as much as 30 days late.

If your score is 50 it indicates that you pay your invoices, but usually about a month after they are due.

If your score is 40 it indicates that you are often about two months past due.

Anything under a 40 is so bad that is is not really worth reviewing.

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