What is a PAYDEX® score, and how does it work?
As a business owner, your PAYDEX score can be an indicator of your business’s overall financial health and creditworthiness.
Continue reading to learn more about PAYDEX scores and how they work, including who uses them, what different score ranges mean, how they’re calculated and how to improve them.
What you’ll learn:
- A PAYDEX score is a business credit score issued by Dun & Bradstreet that indicates to lenders, suppliers and vendors how likely a business is to pay its debts on time.
- Your PAYDEX score may affect your business’s insurance premiums and ability to qualify for business loans or property leases, as well as influence whether suppliers, vendors and customers want to do business with you.
- PAYDEX scores range from 1 to 100, with scores over 80 representing low risk for repaying debts.
- You may be able to improve your PAYDEX score by avoiding late payments and confirming that your suppliers, vendors and lenders are reporting your payments to business credit bureaus.
What is a PAYDEX score?
A PAYDEX score is a type of business credit score issued by Dun & Bradstreet. Just as your personal credit score represents your own creditworthiness and how likely you are to repay your debts, your PAYDEX score reflects how likely your business is to make timely payments to suppliers, lenders and vendors.
PAYDEX scores range from 1 to 100. Higher scores can suggest your business is more likely to make on-time payments.
How to get a PAYDEX score
To establish a PAYDEX score, you’ll first need to apply for a D-U-N-S® number with Dun & Bradstreet. And in order to accurately calculate a PAYDEX score for your business, Dun & Bradstreet needs to have at least two different Trade References report three separate Trade Experiences each.
How to check your PAYDEX score
Dun & Bradstreet has several tiers of business credit-monitoring tools that you can use to check your scores and receive alerts and insights. These include both free and paid solutions for different levels of support.
Who uses PAYDEX scores?
A variety of parties may check your business’s PAYDEX score, including:
- Suppliers and vendors: Your PAYDEX score may influence whether suppliers and vendors want to do business with you.
- Landlords: Your PAYDEX score may affect whether landlords grant you a lease.
- Insurance companies: Your PAYDEX score may impact your insurance premiums.
- Lenders: Your PAYDEX score may affect loan terms or help lenders decide whether to lend you money.
- Customers: Your PAYDEX score may even be a consideration factor for some customers before they decide to do business with you.
What is considered a good PAYDEX score?
A score of 100 is the best possible PAYDEX score your business can receive.
Dun & Bradstreet categorizes its scores as follows:
|
PAYDEX score |
Risk level | Timeliness of payment |
| 80–100 | Low risk | Prompt payment within terms |
| 50–79 | Moderate risk | Payment within 15 days of its due date |
| 1–49 | High risk | Payment 30 or more days past due date |
What impacts your PAYDEX score?
A PAYDEX score is based on “Trade Experiences,” which are payment events reported by suppliers, vendors and lenders registered with Dun & Bradstreet as “Trade References.” Whenever you make (or fail to make) a payment to a Trade Reference, they can report it to Dun & Bradstreet, which may impact your PAYDEX score.
PAYDEX scores are also dollar-weighted measurements. This means that bigger bills and payments can have a heavier impact on your PAYDEX score than smaller ones. For example, paying off a $10,000 invoice quickly can influence your score more than a prompt payment on a $1,000 invoice.
How to improve your PAYDEX score
To build a strong PAYDEX score, here are a few tips to consider:
- Pay any bills on time or early: The best way to improve your PAYDEX score is by making early or on-time payments to your lenders, suppliers and vendors.
- Ensure your payments are reported: Ask your suppliers, vendors and lenders if they’re reporting your payments to Dun & Bradstreet. If they’re not, encourage them to do so. Only payments that are reported can count toward your score.
- Negotiate longer payment terms, if needed: If you’re having trouble making on-time or early payments, consider asking for a longer payment window.
- Use a business credit card: Since Dun & Bradstreet counts business credit card accounts as Trade References, applying for a business credit card and using it responsibly might help your PAYDEX score. Plus, you can benefit from business card rewards while building your credit.
- Regularly monitor your PAYDEX score: Just like you can monitor your own personal credit score, you can monitor your business’s PAYDEX score. You can use score-monitoring tools from Dun & Bradstreet to receive alerts when changes to your score occur.
Key takeaways: PAYDEX scores
A PAYDEX score is a type of business credit score—it reflects a business’s creditworthiness and debt payment history. A number of companies and individuals may consider your company’s PAYDEX score, such as potential suppliers or partners, landlords, vendors, insurance providers and even customers. So, establishing and building a strong PAYDEX score can be a great way to help grow your business.
Looking to establish some Trade References and improve your score? One way to get started is by comparing business credit cards from Capital One. The more you use your business credit card, the more rewards you can receive and the more your bill payments will impact your PAYDEX score.
