A little talk about business credit

There is a lot of talk these days about business credit. What is it? Why would I need it? Well, for starters, the personal credit that many of us strive to keep in the high range can be almost unattainable. Many of us have poor credit and we have never been taught that there is another form of credit that is far superior to that of personal credit and that is the form of credit only known in the business world.

It really is quite simple to open a business these days. However, where most businesses fail is in lacking funds to carry them through the rough times.

Today I want to talk about the scoring system of business credit.

The Dun and Bradstreet Paydex Business Credit Score.
The main credit score used in the business world is known as a Paydex score provided
by Dun and Bradstreet.

This number assess a business’s lending risk much the same as a consumer credit
score reflects a consumer’s individual credit risk.

Paydex is essentially the business equivalent of your personal credit score.
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.

There are many BIG differences from a business Paydex credit score and an individual
FICO consumer 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.

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.
Most lenders and suppliers are looking for a score of 70 and higher. Having a score
of 80 and above is very good. Here is a breakdown of how the Paydex credit score is calculated:

Payment Expectation

Expect payment may come early 100

Payments generally come within early payment discount period 90

Payment is prompt 80

Payment comes 14 days beyond terms 70

Payment comes 21 days beyond terms 60

Payment comes 30 days beyond terms 50

Payment comes 60 days beyond terms 40

Payment comes 90 days beyond terms 30

Payment comes 120 days beyond terms 20

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

It only takes 60 days to establish a positive Paydex credit score. To start you will first
want to apply for a DUNS Number, a nine digit business identifying number, with
Dun and Bradstreet.

Once your DUNS number is established you will next want to find a merchant who
will extend you credit and then report that credit to Dun and Bradstreet.
Once you have positive business credit report to Dun and Bradstreet you will have a
positive Paydex score established.

You will want to then apply for more business credit and use it regularly. Make sure
you pay all payments back early to raise your scores to 80 or higher.
You can easily and quickly establish a positive Paydex credit score.

As you continue to pay your bills timely your scores will continue to raise giving you
the ability to qualify for credit in your business name.

Until next time,

James and Monica.

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