You may already be familiar with your credit report and your FICO score. But if you’re a new business owner, are you also understand the elements that make up your corporate credit? Do you know what Paydex means? This article discusses the basic points that you should know about business credit.
Your Paydex Score
Your Paydex Score is the equivalent of your FICO score. Dun & Bradstreet – a major business credit bureau, uses this method of calculation to measure a business’s credit. Once you’ve registered with D & B and you have received your D&B number, your financial dealings with creditors and other businesses will be reflected in your business credit report. When you obtain a copy of your credit report from D&B, part of the report includes your Paydex score.
A Paydex score ranges from 0-100, with 90 and above considered as excellent, 80 as good or acceptable, and 70 and below indicates a poor rating. Just as individuals aim for a high FICO score, business owners also want to reach a high Paydex score and maintain an excellent standing.
How to Raise Your Paydex Score
How do you achieve a high Paydex score? Timeliness of payment plays a vital role in how your business credit score is calculated. Of course, the best way to achieve an outstanding score is to always submit your payments on time. If you can pay your bills earlier than your due date, then the better it would be for your business credit.
Would occasional late payments affect your score? Yes. In fact, even a single late payment can pull down your score by a point or two. Nevertheless, if your average score is around 95 or more, falling one or 2 points down would bring you to a score of 93 which is still considered as an excellent rating. On the other hand, if your average score happens to be 82 flat and you’ve lost 2 points because of occasional late payments, then that would bring your total score down to 79 which can be considered as a poor rating.
Thus, as much as possible, it is crucial to be on time in submitting your payments to all your creditors. What if you can’t afford to pay all your creditors on time? It would be better to pay off your highest bill first to lessen the impact on your credit score.
Using Your Paydex Score to Get a Business Credit Card
Obviously, a high Paydex Score makes you an ideal client for banks and lenders while a low score makes you a high-risk borrower in the eyes of creditors. It is interesting to note that the best business credit cards in the market always require good to excellent credit.
However, if you have a poor business credit, you may consider getting a secured business credit card as a tool to raise your Paydex score. Understandably, a bad credit business credit card would have higher interest rates and lower credit limit than credit cards that require good credit. Nevertheless, by using your credit card account and paying your bills on time, you can make an improvement in your score within just a few months. Find a credit card that would report your payments to the major business credit bureaus as it is the only way you can raise your Paydex score. Eventually, you can ask your credit card issuer to upgrade your account once you’ve raised your credit score.
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Showing posts with label Business Credit Score. Show all posts
Showing posts with label Business Credit Score. Show all posts
Tuesday, July 28, 2009
Thursday, June 18, 2009
All about Your Business Credit Score
All businesses –both large and small – all rely on good credit standing for a favorable stand with prospective lenders. By having an excellent business credit score, a business owner can be confident that he can obtain the financial assistance he needs at any time without difficulty.
But building a credit history for your company is not achieved in an instant. Time and effort is also needed in order to build a solid business credit. In this article, let’s discuss the necessary steps to establish your own corporate credit.
Ensure your business entity. The legality of your business is crucial in establishing business credit. First, you need to define the legal entity of your business. It can either be a corporation or an LLC (Limited Liability Company) to qualify for a bank loan. If your business is a sole proprietorship, you may not qualify for a business loan and it would be easier to apply for a personal loan instead.
Proof of existence. In order to be considered as a legitimate company, you need to have a physical address, a business telephone number, and a complete contact information. A website and an e-mail would not be a sufficient proof of your company’s existence since anyone can easily create a presence online. Having a physical address is what’s most important.
Obtain all necessary business permits and licenses. Make sure that you’ve secured all licenses and permits that are required for all businesses in your local state.
Register for a business tax ID number. A business that has been in operations for at least 2 years should have a complete record of financial statements and have its own tax ID number. Make sure that your tax ID number, EIN (employer ID number), and licenses are all listed in the same exact legal company name.
Establish your business savings account. Having your own business bank account is a solid proof that your business is financially stable. A balance of at least $10,000 for the past three months is considered as favorable and stable.
Establish at least 5 trade references. Build up a good business-to-business relationship with your suppliers or business partners so you can use them as references for establishing your business credit.
Register your business with a business credit bureau. Before you can start building your company’s credit history, you need to register your company with a business credit bureau like Dun & Bradstreet or Experian. D & B is a leading business credit reporting agency in the US.
Get a business credit card. After registering your company with a credit bureau, applying for a business credit card is a great way to build up your business credit. As you use your small business credit card with your expenses, you are also building up a solid credit history. Of course, maintaining an excellent credit history depends on how well you handle your credit card account. If you make it a point to stay within your credit limit and if you’re always on time with your payments, you are building a positive reputation for your business.
Credit Cards Resources
* Instant Approval Credit Cards
* Reward Credit Cards
* Free Credit Report
But building a credit history for your company is not achieved in an instant. Time and effort is also needed in order to build a solid business credit. In this article, let’s discuss the necessary steps to establish your own corporate credit.
Ensure your business entity. The legality of your business is crucial in establishing business credit. First, you need to define the legal entity of your business. It can either be a corporation or an LLC (Limited Liability Company) to qualify for a bank loan. If your business is a sole proprietorship, you may not qualify for a business loan and it would be easier to apply for a personal loan instead.
Proof of existence. In order to be considered as a legitimate company, you need to have a physical address, a business telephone number, and a complete contact information. A website and an e-mail would not be a sufficient proof of your company’s existence since anyone can easily create a presence online. Having a physical address is what’s most important.
Obtain all necessary business permits and licenses. Make sure that you’ve secured all licenses and permits that are required for all businesses in your local state.
Register for a business tax ID number. A business that has been in operations for at least 2 years should have a complete record of financial statements and have its own tax ID number. Make sure that your tax ID number, EIN (employer ID number), and licenses are all listed in the same exact legal company name.
Establish your business savings account. Having your own business bank account is a solid proof that your business is financially stable. A balance of at least $10,000 for the past three months is considered as favorable and stable.
Establish at least 5 trade references. Build up a good business-to-business relationship with your suppliers or business partners so you can use them as references for establishing your business credit.
Register your business with a business credit bureau. Before you can start building your company’s credit history, you need to register your company with a business credit bureau like Dun & Bradstreet or Experian. D & B is a leading business credit reporting agency in the US.
Get a business credit card. After registering your company with a credit bureau, applying for a business credit card is a great way to build up your business credit. As you use your small business credit card with your expenses, you are also building up a solid credit history. Of course, maintaining an excellent credit history depends on how well you handle your credit card account. If you make it a point to stay within your credit limit and if you’re always on time with your payments, you are building a positive reputation for your business.
Credit Cards Resources
* Instant Approval Credit Cards
* Reward Credit Cards
* Free Credit Report
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