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Paydex score is a credit scoring system developed by Dun & Bradstreet. The score ranges from 0 to 100 with higher scores indicating the trustworthiness of any particular business. It basically tells prospective business partners, suppliers or lenders how prompt and on time the company pays its bill. Usually a score above 80 is deemed to be favorable. It is often used to determine the amount of product that should be advanced to you, and on what credit terms. In this way, the suppliers are able to measure the level of risk to do business with any particular company. Banks and lending institutions also uses Paydex score to gauge the credit risk of companies. It is the key factor in approving or rejecting applications for loans or extensions of business credit lines. In keeping the record, Dun & Bradstreet collects all the payment activity by asking suppliers to register the payment records of companies that they do business with, and this report make up the Paydex. This special report show detailed records of payment to creditors and any late payments reported in the last 12 months. If your business credit rating is low, it's best to find ways to improve your Paydex score. There are ways to do so. One of those is to obtain small loans from the banks and pay ahead of time. This can raise your business credit score since it is directly related to how you pay your bills. It is also a way to show your business suppliers that you are a good credit risk as a buyer of their products or services. More importantly, an excellent business score, say above 80 will improve your chances of obtaining financial loan at a time when you need it most. Especially if you're a small business owner in need of financing. Like your personal fica score, it's a good rule of thumb to establish your Paydex score at least three to six months before you plan to get a loan and keep score high at all times.
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