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Decoding the PAYDEX Business Credit Score

Published By Janet Gershen-Siegel at July 5th, 2018

What is PAYDEX?

Written by Janet Gershen-Siegel

Do you have a PAYDEX business credit score, but you’re not sure exactly what went into it, and how to read it? It’s time to start decoding your PAYDEX business credit score.

A PAYDEX business credit score serves as Dun & Bradstreet’s dollar-weighted numerical rating of how a business has paid its bills over the past year. D & B bases their scoring on trade experiences as reported by various vendors. So these can be a business’s landlord, suppliers, etc. It depends on what will apply to your particular circumstances.

The Dun & Bradstreet PAYDEX Score is reported in a range running from 1 to 100. As you might expect, higher scores mean a better payment performance.

That is, your business pays its bills on time or early, and it pays them as close to fully as possible. These can keep your PAYDEX score in a better range.

Getting Your Business’s First PAYDEX Score

Your PAYDEX score does not start to be figured until your business has a DUNS number, so that comes first. There are other means of improving your PAYDEX score, including establishing business credit which is separate from your personal credit.

Your PAYDEX score comes from your DUNS number and your payment history, so it’s imperative to get your DUNS number first.

The Basis of Your Business’s PAYDEX Score

Dun & Bradstreet’s PAYDEX business credit score has a basis in payment details which are reported to the bureau. Or they may be reported to data-gathering businesses partnering with the agency.

D & B uses this data, as well as a credit score and financial stress score, so as to advise just how much credit a creditor should extend to your business.

So as to get a PAYDEX number, you have to have a DUNS number, plus the bureau will need to have reports of your payments with four or more vendors. Your business’s PAYDEX score reveals if your payments are typically made on schedule or ahead of schedule. As you might expect, a higher number is better.

PAYDEX Score Breakdown

The scores break down as follows:

  • 80-100: A low risk of late payments.
  • 50-79: A medium risk of late payments.
  • 49: A high risk of late payments.

Your business’s credit score ranges from 1 to 5. 1 is the best score.

This matches your small business with other companies with comparable payment histories. The figure shows how often those small businesses tend to pay promptly.

This information can help creditors to recognize your small business’s standing. However, it does not genuinely demonstrate all of the payment data from your business.

Financial Stress Score

The financial stress score also runs from 1 to 5. This score matches your business with other businesses sharing comparable financial and business characteristics. These similarities are in areas like size or amount of time in business.

This score shows how often those companies tend to pay on time. As before, 1 is the best score. This rating is a broader look at the business landscape, versus an analysis of your business’s true payment history.

A good PAYDEX score for your business is 80-100.

PAYDEX Business Credit Score, on Balance

Your PAYDEX business credit score like most other credit scores out there, boils down to two things:

  1. Do you pay on time (or early)? And
  2. Do you pay in full?

So the best thing you can do, in terms of being fastest and most effective, is to pay your invoices quickly and in full, if you want to raise your business’s PAYDEX business credit score. This will help you more than anything else you can possibly do.

Discover this new way to monitor your business credit scores.

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