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- Developed by data and analytics firm Dun and Bradstreet, the Paydex score is a business credit score that ranges from 1 to 100.
- A good Paydex score starts at 80, with early payments giving companies higher scores.
- Paydex scores are dollar weighted. This means that paying off more debt will have a greater impact on your score.
Before anyone gets credit, whether it’s a loan to buy a car, a credit card, or a mortgage, potential creditors check their credit score to see how likely they are to pay off their debt on time. increase. The higher your credit score, the better your rate.
When a business borrows money, the Paydex score serves a similar function, measuring creditworthiness based on payment history. A vendor or lender sees his Paydex score for a business to help determine risk before signing a contract, approving a business loan, issuing a company credit card, or starting a transaction with another company can do.
What is Paydex Score?
The Paydex score is a business credit score that is “used much like a personal credit score,” says John J. Fowler, director of the Institute for Corporate Responsibility at the George Washington University Business School. His Dun & Bradstreet (D&B), a data and analytics company, publishes these scores for all companies, regardless of size.
Paydex scores are calculated based on how quickly a company pays off its debt. They help vendors, suppliers, and lenders reduce risk when doing business with other companies.
What is a good Paydex score?
Paydex scores range from 1 to 100. The higher the score, the more likely the company will pay its debts on time, according to Brian Alster, general manager of risk and compliance for Dun & Bradstreet Third Party.
A Paydex score of 80 means a business is more likely to pay bills on time. For a score above 80, the company must pay its debts on time. On the other hand, anything below 80 indicates that the company has a history of late payments, Alster explained.
Paydex score categories are:
How are Paydex scores used?
Paydex scores are primarily used for business-to-business decision making. Large corporations, family-owned stores, and government agencies all use Paydex scores as a factor in assessing the risk of late payments or not being paid at all.
However, a low Paydex score does not mean your business is out of control, and a high Paydex score does not automatically guarantee a business deal. Alster explains that the Paydex score is derived purely from historical information (a record of a company’s debt repayments), so it is only a partial indicator of a company’s future repayment potential.
To help businesses make better-informed decisions, Dun & Bradstreet publishes other scores that can be used with Paydex scores. For example, the Delinquency Predictor and Financial Stress scores help predict whether a company will cease operations within the next year, providing a more complete risk profile.
How is my Paydex score calculated?
Dun & Bradstreet uses a company’s past two years of trading experience (also known as payment experience) to calculate a company’s Paydex score. A transaction experience is a record detailing a company’s transactions with a “deal reference”. A transaction reference is a supplier or creditor reporting to Dun & Bradstreet a transaction with the company in question.
Consumer credit scores use information from data providers, but businesses can self-report exchanges to Dun & Bradstreet, but this information must be verified. Dun & Bradstreet collects data primarily from creditors, vendors and other sources.
Not all entities around the world report data, but Alster says a “significant” number of companies across all industries do. This means that many, if not all, entities are likely to have transactions that regularly report the data that Dun & Bradstreet has factored into their Paydex scores.
The list of companies reporting data to Dun & Bradstreet is private, but Alster said it could include commercial payments ranging from small electricity bills to large business loans.
Trial benefits
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Trial benefits
$500 cashback when you purchase $5,000 worth of eligible products with your card within 3 months of opening an account
reward
Earn 3% cashback every time you swipe your card without category restrictions.
earnings business card
detail
reward
Earn 3% cashback every time you swipe your card without category restrictions.
Trial benefits
$500 cashback when you purchase $5,000 worth of eligible products with your card within 3 months of opening an account
Recommended credit
bad to normal
Usual annual rate (APR)
none
Intro Annual Rate (APR)
Factor based
How can businesses set their Paydex scores?
To set up your Paydex score, you need to get a DUNS (Data Universal Numbering System) number for your business. from Dunn & BradstreetA DUNS number is like a social security number for your business, allowing you to start building your business credit file. The process is free and can take up to 30 days, but you can expedite the process for $229.
Once you’ve established your DUNS number, you typically don’t need to take any additional steps to trigger your Paydex score. Dun & Bradstreet will monitor government databases to see when new businesses are forming and will automatically start aggregating data for those businesses, Ulster said.
However, Dun and Bradstreet must report at least three trading experiences from at least two trading references. The best way to start calculating his Paydex score for a business is to “make a deal” and make payments on time or early, he explains Alster. You can do this by opening a business credit card and taking out a business loan.
Alster stresses that business owners should avoid using personal credit for companies, as Paydex scores only include a history of commercial transactions. This means that using your personal loan or personal credit card for business expenses will not affect your Paydex score, even if those transactions are for legitimate business purposes.
How long does it take to get my Paydex score?
According to Alster, there is no “golden rule” for when a new business receives its first Paydex score. He explains that the more “capital intensive” a business is, the faster it builds a Paydex score.
That means building a commercial debt and payment history as early as possible can help businesses get a Paydex score sooner, says Alster. For example, some businesses invest heavily in equipment and machinery, or pay off his loan before the business opens, and he receives a Paydex score before meeting his first client.
Paydex Score Frequently Asked Questions (FAQ)
Just like building personal credit, improving your Paydex score can take time, but it is possible. The best way to improve your low Paydex score is to increase your commercial credit and pay your debts on time or early.
You can consider opening a new commercial credit card or taking out a business loan. Paydex scores are dollar-weighted, so paying off a larger debt has a bigger impact. However, paying all commercial debt promptly, regardless of amount, will help improve your Paydex score over time.
Since companies do not know which companies have reported transaction history to Dun & Bradstreet and which have not, it is best to assume that all commercial transactions are included in the Paydex score.
A high Paydex score gives businesses access to more credit and favorable interest rates, so every business should be monitored frequently. Businesses can access Paydex scores by purchasing a subscription. Dun and Bradstreet Credit Checker, CreditSignal.
The three main business scores are Dun and Bradstreet, Experian and Equifax. All three credit scores range from 1 to 100, similar to the TransUnion, Equifax, and Experian consumer credit scores.