If you own a small business, one of things you should be concerned about is building your business credit. In this article, let’s talk about what a business credit Paydex score and the role it plays for your company.
Understanding Your Business Credit Paydex Score
The Paydex Scoring System was developed by Dun and Bradstreet or D&B, a leading credit reporting agency in the US. D&B is in charge of recording all payment reports from banks as well as business-to-business lenders and merchants. The Paydex Score is used to calculate credit history for business entities and is the equivalent of the FICO score for individual consumers.
Newly established businesses are encouraged to register with D&B to start building a separate credit history for their company. Thus, as you open business accounts from banks and business-to-business to merchants, you are also building your business credit rating. Nevertheless, take note that not all lending companies and suppliers have provisions on business credit reporting. As a business owner, it is up to you to ensure that your lender or supplier provides this important service for you.
The Paydex Scoring System ranges from 0 to 100, with 90-100 as excellent scores; 80 and below as good; and 70 and below as bad scores. Obviously, all entrepreneurs must make it a goal to reach a Paydex Score of at least 80 and above to enjoy good standing.
How to Raise Your Paydex Score
The Paydex Score is calculated based on several factors. Just like with the FICO Scoring System, timeliness of payment is considered to be a big factor in your total score. Hence, occasional late payments with your business credit card or business loans can put your business credit rating in danger. Clearly, the best way to protect your business credit rating is to be consistent in submitting your payments.
What if it’s not possible for you to a payment on your due date because of financial issues? In this case, the smartest step to do is to speak with your creditor and ask for an extension. Many lending companies will gladly cooperate as long as they’re given an advanced notice.
Another important factor that affects your Paydex Score is the credit variations. The types of credit or types of account that you open up can make a different in your rating. It is a good idea to try to open a business credit card account along with your business loan to raise your score.
Check your business credit report on a regular basis- ideally, at least twice a year to ensure that the details contained in your report are accurate. Do not hesitate to contact D&B if you have any issues or concerns about your business credit history.
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Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2010 |
