When applying for small firm credit your Paydex score is probably the most foremost factor looked at by lenders. A Paydex score is your firm version of a personal Fico score. It is a score generated by the reporting firm Dun and Bradstreet that reflects your history of paying vendors and other lenders on a timely basis.
If your firm credit has a high sufficient Paydex score your firm may right away qualify for essential vendor credit as well as firm credit cards, equipment financing, bank loans and lines of credit. If your firm does not have a good Paydex score you will have issue establishing new credit and existing credit lines can be in peril.
Your Paydex score is compiled by D and B straight through ongoing payment input from vendors that record if you pay early, on-time or make late payments. The Paydex ideas ranks businesses on a scale of 0 to 100. A zero score is the lowest and a 100 score is the best potential rating.
Any Paydex score over the level of 80 indicates a firm that pays its bills on time. Small firm owners should focus heavily on keeping their Paydex score at or above the 80 level. New businesses need to get their score established at the earliest opportunities.
Raising your Paydex score is not as complicated as raising a personal Fico score.
A) Your Paydex score is based solely on your payment history to reporting lenders. By sorting out your reporting vendors from non-reporting vendors you can swiftly increase your Paydex score simply by paying those vendors early. By paying the reporting vendors ten days before their invoice is due your Paydex score can climb significantly. Since your Paydex file shows that you are paying reporting vendors ten days before due date, it is calculated that you are paying all of your vendors that way, even if you are paying non-reporting vendors on their general terms. By selectively paying unavoidable vendors early you can increase your score without hurting cash flow. Within a few months your score can be very, very good.
B) Here is what your Paydex score means:
The scores directly divulge to your payment history as follows:
If your score is 100 (almost impossible to achieve) it means that you pay your invoices often before they even arrive in the mail.
If your score is 90 it means that you are paying early sufficient before the due date to take advantage of any discounts or incentives that vendors offer for early payment.
If your score is 80 or higher it means that you all the time pay your invoices on time. Not often early and never late. Just on time. This score is the target for most businesses.
If your score is 70 it means that your vendors are reporting that you pay about two weeks after the invoice is legitimately due, generally determined paying in the "grace period."
If your score is 60 it indicates that you run late on paying your bills but rarely as much as 30 days late.
If your score is 50 it indicates that you pay your invoices, but usually about a month after they are due.
If your score is 40 it indicates that you are often about two months past due.
Anything under a 40 is so bad that is is not legitimately worth reviewing.
c) There can be a cut-off Paydex score for personal warrant requirements
If you, as a firm owner, do not have perfect personal credit there is often a difficult situation created when a vendor requests a personal guarantee.
The key is to start with vendors that do not wish one. One example would be a web hosting firm like Blue Ribbon Web Hosting ( http://www.blueribbonwebhosting.com ). They supply Usa based corps and Llcs in good standing net-30 accounts without a warrant from the owner.
Find clubs like this one that record to D and B and will offer credit to new businesses. There are many out there if you seek them out. Look at services that you need to purchase anyways and find for a reporting vendor for that service, it may not be much Dollar volume on your record but it helps establish a file and a good Paydex score.
Just four or five reporting creditors paid ten days early can push your score up in just a few months.
Once you have a track record established with small vendors you can apply with larger and more difficult vendors.
The private to Your Paydex Score