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We all know that a credit card issuer will look at your credit score, usually referred as the FICO score, before issuing you a credit card. Actually, business lenders use a similar approach or credit scoring system to determine your business credit performance and decide whether or not to give you credit.

Although there are many business credit reporting agencies entered in the market in the past decade, including Experian, the Paydex score from Dun & Bradstreet remains the primary source for business credit scores and reports. A Paydex score is a number from Dun & Bradstreet that is an indicator of your business operation. The Paydex score is the business equivalent to your personal credit score. This score plays an important role in determining whether you get a loan (and loan rate & loan amount etc) and how other businesses deal with yours.

According to Dun & Bradstreet (D&B), the Paydex score is:

D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors. The D&B Paydex score  ranges from 1 to 100, with higher scores indicating better payment performance.

More detailed explanation about the Paydex score:

• 100 – Payments are received prior to date of invoice (Anticipated)
• 90 – Payments are received within trade discount period (Discount)
• 80 – Payments are received within terms granted (Prompt)
• 70 - 15 Days Beyond Terms
• 60 - 22 Days Beyond Terms
• 50 – 30 Days Beyond Terms
• 40 – 60 Days Beyond Terms
• 20 – 120 Days Beyond Terms
• UN – Unavailable

You can view a sample Paydex report from here.

How to establish your business credit report?

You can star to build your Paydex score by enrolling in the CreditBuilder or ScoreBuilder programs offered by D&B, but this will cost you some money. Or you can apply for a DUNS (Data Universal Numbering System) number which is an unique nine-digit numbering system that is used to identify a business. and use it to apply for a small line of credit at a company that reports to D&B regularly.

How to boost your Paydex score?

The most important thing is to keep a Paydex account active. And the best way to boost your Paydex score is to pay all of your bills early. Because this score is directly related to how you pay your bills. Or you can pay small bills later but pay large bills early. This might also be helpful but not so good as both pay them early.

How ever, you should put in mind that applying for a busines line of credit is different from the procedure for applying for a business credit card. The application process for a business card usually requires owners to provide their own ITIN or SSN, that is, credit issuers will still pull your personal credit report instead of business credit report. To get a business credit card, you have to maintain a good FICO score. That’s also why individauls can apply for business credit cards.