How Paydex Score Helps Your Business Financing

If you own a business, you should be interested in learning about Paydex Score and how it can affect your business. What is a Paydex Score? How can you keep your Paydex Score in an excellent standing? Is it really important to keep your Paydex on a high level? What can you do to improve your business credit? Let’s answer these questions one by one.

Your Paydex Score Helps Your Business Financing
You may already be familiar with your personal credit report and how your credit score is calculated. For business owners and enterprises, the Paydex is the equivalent of your personal credit score or better known as FICO score. If you’ve already signed your business with Dun & Bradstreet (business credit bureau), you are already building a separate credit history for your business.

Your Paydex Score is the number you get from Dun & Bradstreet. This score is included in your business credit report for your prospective creditors to see. A Paydex score ranges from a low of 80 to a high of 90 to 100. Meanwhile, a score of 70 and below are considered as poor and sends out a negative impression to lenders.

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Building Your Business’s Paydex Score

As a business owner, one of the things you should be interested about is your Paydex score. Do you clearly understand what a Paydex Score is? What role does it play in building your business credit? How can you build up an excellent business credit?

Understanding Your Business Credit Paydex Score

Paydex is a system developed by Dun and Bradstreet (D&B) - the leading credit reporting agency in the US. The Paydex Score is used to calculate a business’s credit history in terms of figures. For individuals, it is the equivalent of the FICO score. However, the Paydex system is only applicable for business entities.

Once you’ve registered with D&B, you also begin building your business’s credit history. Nevertheless, take note that not all lenders and merchants report to D&B. Thus, it is important to make sure that the lender or supplier you’re dealing with reports your payments to the credit bureaus.

Included in your business credit report would be your Paydex Score. This scoring system ranges from 0 to 100, with 90-100 considered as an excellent rating. A score of 80 and below is considered as good while a score of 70 and below indicates bad credit.

Obviously, a higher Paydex score would give a business the advantage of qualifying for loans or accounts that require excellent credit. Banks, lending companies, suppliers, merchants and investors all rely heavily on your business credit history when it comes to closing deals. Therefore, every business owner must be concerned about raising his business credit rating.

How to Raise Your Paydex Score

What factors affect your Paydex Score? Just like with your personal credit report, the timeliness of your payment plays a big role in building your business credit. If current funds aren’t enough to cover all your debts from different creditors, try to pay off your largest debts first to avoid incurring high interest rates and penalty charges. One or two late payments may not create a big damage to your score but constant late payments would certainly hurt your business credit.

What if it’s not possible for you to meet your payment due date because of a financial crisis? In this situation, the best thing to do is to contact your creditor right away and ask for an extension of your payment deadline. Explain your situation to your lender and ask for some adjustment in your payment terms. Most lenders would be willing to do so especially if your records show that you’ve been a good and trusted customer in the past.

The types of credit you have are also determining factors in attaining a high Paydex score. Acquiring a business loan or a business credit card can be great tools in building business credit. Remember, to build an excellent credit, you should make it a point to stay within your given credit limit and to submit your payments on time at all times.

Reviewing your business credit report from time to time is also advised. In case you may have some issues with the information contained in your report, you may contact D&B and request for an investigation.


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Managing Business Credit Card Debt

Starting up a business involves expenses. For most new entrepreneurs, a loan is a must in order to get the business started. Aside from business loans, additional support may be necessary in keeping up with the production and operating costs. Small business credit cards often provide this much-needed financial assistance to business owners.

Why Get a Business Credit Card Debt

Some people may be skeptical about obtaining credit cards for business because they are afraid that credit cards may lead to uncontrolled spending and debt. However, business credit cards can be great tools not only in keeping a steady cash flow but also in separating your business and personal finances. With the help of business credit cards, monitoring your expenses is also a lot more convenient and easy. How can you get the most from your business credit card? How can you avoid credit card debt?

Obviously, proper management and control is needed to avoid the risk of credit card debt. For instance, some entrepreneurs may be prone to charging their personal expenses on their business credit card but such a habit can easily lead to uncontrolled debt. As a business owner, you need to make sure that your business credit card is exclusively used for official business purposes.

Submitting your credit card payments on time is also crucial if you want to stay away from trouble. It could be tempting to pay only the minimum due even if you have the cash to pay your balances in full. But carrying over your balances from month to month also means paying for the additional interest charges. Thus, to avoid unnecessary costs, make it a point to completely pay off your charges each month.

Business Credit Card Debt Consolidation

But what if you’re already stuck in credit card debt? What can you do about it? A business owner has two options to solve this problem. One is by acquiring a debt consolidation loan to pay off all existing balances and stop the interest rates from accumulating further. By combining his credit card debts into a single loan, the interest rate is reduced and monthly payments are significantly lowered.

Another way is by getting a balance transfer credit card with low interest or zero interest. This would enable you to pay off all the balances you transferred at a low rate or zero interest. However, take note that the 0% APR is only applicable for a limited time, so you must take advantage of this opportunity by completely paying off all the debts you’ve transferred within the zero interest period.

Any of these two credit card consolidation options can work but in order to be effective, a business owner needs to ensure that he/she can pay bills without a single delay or miss. It would also be wise to avoid incurring new debts while still working on your repayment. Finally, once you’re done with your repayment, you need to a lot more careful about using your business credit cards to avoid falling in the same debt trap again.

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