The Role of Paydex Score in Building Business Credit

Perhaps you are familiar with your personal credit report and your FICO score. But if you’re a business owner, you should familiarize yourself with the business credit scoring. In this article, let’s talk about the business scoring system and how you can build a solid business credit.

Your Paydex Score

The Paydex Score is the equivalent of the consumer FICO score. Business credit trackers use this business scoring system to measure the credit rating of companies and small businesses. If you own a small business, all you have to do is sign up with a business credit tracker like Dun & Bradstreet or Experian Business.

The Paydex score ranges from 0-100. A score of 90 and above is an excellent rating, 80 as good or acceptable, and 70 and below is considered as poor or bad rating. Consumers aim for a high FICO score to win approval from lenders and business owners should aim for a high Paydex score as well.

How to Raise Your Paydex Score

A good or excellent Paydex score cannot be achieved overnight. It takes time to build a solid business credit and it requires effort to maintain a good rating. Just as it is important for consumers to pay on time to keep a good personal credit, those who manage a business or a company must pay attention to their payment habits and make sure that all their business transactions are in good standing.

Does this mean that occasional late payments can significantly pull down your business credit score? Timeliness of payment can pull down your final credit score by 2 points or more. Let’s say that your average Paydex score is at 90 flat and you missed your deadline of payment a couple of times for this year. Your total Paydex score can drop down by 2 points or more which will give you a score of around 88 or lower.

Yes, it is very important to submit your payments to all your creditors on time. If you will not be able to submit your payment on the due date, the best thing to do is contact your creditor and ask for an extension of your payment due date. Most lenders would extend your deadline as long as you speak with them ahead of time.

Using Your Paydex Score to Get a Business Credit Card

Enjoying a high Paydex Score will give you an advantage when you apply for a business credit card. If you search the business credit card market, you’ll see that the best deals are only offered for business owners with good to excellent credit history.

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But what if you still need to work on raising your Paydex score? If you happen to have a low credit score, you may consider getting a secured credit card for business. A secured business credit card can be used as a tool for rebuilding poor credit. By using your secured business credit card to pay your business expenses, you can raise your Paydex score one step at a time.

The most important thing to remember when improving your credit score is to pay off your credit card balances on time. After at least a year of consistent payment, call up your business credit card issuer and request for an upgrade to a non-secured business card account.