Paydex Score - Your Business Credit Ratings

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Paydex score is a weighted business credit rating system that was developed by Dun & Bradstreet to track the performance of the companies to pay their bills.

The score ranges from 0 to 100 with higher scores indicating better payment performance. In general, a high score of 80 means that a company pays its bills on time and almost always an indicator of how good you may take into consideration for the payment of bills in the future.

A low score, on the other hand, means that the company has had some trouble paying their bills on time sometime during the past year.

This credit rating is often used to determine the amount of product that should be advanced to companies and businesses, and on what terms. In some cases, used to decide if they wanted to enter into supply agreements with these companies at all.

Banks and lending institutions also uses Paydex score to determine the credit risk of companies and has been known to be a key factor in approving or rejecting applications for loans or extensions of business credit lines.

Dun & Bradstreet collects this information by asking suppliers to register the payment records of companies that they do business with, and this report of payment activity make up what we call, Paydex. In this way, the suppliers are able to measure the level of risk to do business with any particular company.

The business credit ratings is also given to banks and financial and special reports can be generated for most companies in minutes. These reports show detailed records of payment and any late payments reported by providers in the last 12 months.

Dun & Bradstreet also produces a series of reports that use the Paydex score to show trends in payment of individual companies, business groups and even entire industry reports that show how companies are compared with others in your area of business.

If your business credit rating is low at best, it's best to find ways to improve your Paydex score. There are ways to do so. One of those is to obtain small loans from the banks and make the payment on time.

This can increase your business credit score and also a way to show your business colleagues that you are a good credit risk as a buyer of their products or services.