WHAT IS A BUSINESS PAYDEX SCORE?
A business credit score is the credit scoring model for a business which indicates to lenders or creditors the likelihood and/or ability of your business repaying debts. For Dun and Bradstreet, they call it a Paydex score. These scores may help you secure better terms the next time you apply for a small-business loan, credit, or get an insurance policy for your business. Business credit scores are based only on whether the business pays its bills before-time or on-time. A business owner can obtain credit much faster using their business credit profile, unlike with consumer credit. Per the Small Business Administration, credit approvals and limits on business credit cards are usually 10 to100 times higher than the approvals and limits consumer credit cards. This is another great advantage of establishing business credit.
Most of the factors are similar to those used to calculate your personal credit scores, while others are unique and specific to the calculating business credit scores. Moreover, your business’s credit scores are calculated from various traits about your company and its financial history. Those variables could include industry risk, company size, payment history, outstanding debts, length of credit history, credit utilization ratio, and public records, such as bankruptcies, liens, and judgments.
Business credit scores vary between agencies and reports because they can have different information on file for the same person or business, and can produce a different score. The two most popular business credit scores come from the two credit bureaus most renowned for their business reporting. Despite offering business credit reports, Equifax does not market business credit scores.