When applying for small business credit, your Paydex score is probably the most important factor lenders look at. A Paydex score is your business version of a personal FICO score. It’s a score generated by reporting firm Dun and Bradstreet that reflects your history of paying vendors and other lenders in a timely manner.

If your business credit has a high enough Paydex score, your business can instantly qualify for significant vendor credit, as well as business credit cards, equipment financing, bank loans and lines of credit. If your business doesn’t have a good Paydex score, you’ll have trouble establishing new credit and existing lines of credit may be in jeopardy.

Your Paydex score is compiled by D and B through continuous payment input from providers reporting whether you pay early, on time or if you make late payments. The Paydex system rates companies on a scale of 0 to 100. A score of zero is the lowest and a score of 100 is the best possible rating.

Any Paydex score above the 80 level indicates a company that pays its bills on time. Small business owners should focus heavily on keeping their Paydex score at or above the 80 level. New businesses need to establish their score as soon as possible.

Raising your Paydex score isn’t as complicated as raising your personal FICO score.

A) Your Paydex score is based solely on your payment history to reporting lenders. By separating your reporting providers from non-reporting providers, you can quickly increase your Paydex score simply by paying those providers early. By paying reporting providers ten days before your bill is due, your Paydex score can increase significantly. Since your Paydex file shows that you are paying vendors who report ten days before the due date, it is calculated that you are paying all of your vendors that way, even if you are paying vendors who do not report on their terms. normal. By selectively paying certain vendors ahead of time, you can boost your score without affecting cash flow. In a few months your score may be very, very good.

B) This is what your Paydex score means:

Scores relate directly to your payment history as follows:

If your score is 100 (almost impossible to achieve), it means you often pay your bills before they even arrive in the mail.

If your score is 90, it means you’re paying early enough before your due date to take advantage of discounts or incentives providers offer for early payment.

If your score is 80 or higher, it means you always pay your bills on time. Not often early and never late. Just in time. This score is the goal for most companies.

If your score is 70, it means your providers report that you pay approximately two weeks after the bill is due, which is commonly considered payment in the “grace period.”

If your score is 60, it indicates that you are late in paying your bills, but you are rarely even 30 days late.

If your score is 50, it indicates that you pay your bills, but usually about a month after they are due.

If your score is 40, it indicates that you are often about two months behind.

Anything below 40 is so bad it’s really not worth checking out.

c) There may be a Paydex cut-off score for personal collateral requirements

If you, as a business owner, do not have excellent personal credit, a difficult situation is often created when a supplier requests a personal guarantee.

The key is to start with providers that do not require it. An example would be a web hosting company like Blue Ribbon Web Hosting (http://www.blueribbonwebhosting.com). They provide US-based corporations and LLCs with net 30 accounts in good standing without a guarantee from the owner.

Find companies like this that report to D and B and will offer credit to new businesses. There are plenty out there if you look for them. Look at the services you need to buy anyway and find a reporting provider for that service, it may not be a lot of dollar volume on your report but it helps to establish a file and a good Paydex score.

Just four or five informed creditors paid ten days early can boost your score in just a few months.

Once you have an established history with smaller providers, you can apply with larger and more difficult providers.