What Is a Paydex Score?

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  • Developed by data and analytics company Dun and Bradstreet, Paydex scores are business credit scores that range from 1-100.
  • A good Paydex score starts at 80, with early payments earning a company higher scores.
  • Paydex scores are dollar-weighted, which means paying off higher debts have a bigger impact on your score.

Before anyone can take out credit — be it a loan to buy a car, a credit card, or a mortgage, potential creditors will check their credit score to see how likely they will pay off their debt on time. Higher credit scores qualify for the best rates.

When a business borrows money, its Paydex score serves a similar function, measuring its creditworthiness based on payment history. A vendor or lender can look at a business’s Paydex score to help them determine its risk before entering into a contract, approving a business loan, issuing a company credit card, or otherwise entering into a transaction with another company. 

What is a Paydex score?

A Paydex score is a business credit score that “is used just like a personal credit score,” says John J. Forrer, director of the Institute of Corporate Responsibility at George Washington University’s School of Business. Data and analytics company Dun & Bradstreet (D&B) issues these scores to all businesses regardless of size.

Paydex scores are calculated based on how promptly a business pays off its debts. They help vendors, suppliers, and lenders mitigate risk when dealing with another company by showing how reliably it pays off its debts on time. 

What is a good Paydex score?

Paydex scores range from 1-100. According to the general manager of Third-Party Risk and Compliance at Dun & Bradstreet, Brian Alster, the higher the score, the more likely a business will pay its debts on time. 

A Paydex score of 80 means a business will likely pay its bills on time. To score above 80, a company must pay its debts before their due dates. On the other hand, anything below 80 indicates that a business has a history of late payments, Alster explains.

The Paydex score categories are as follows:

How are Paydex scores used?

Paydex scores are primarily used in business-to-business decisions. Large corporations, mom-and-pop shops, and governmental agencies all use Paydex scores as one factor in assessing their risk of being paid late or not at all.

However, a bad Paydex score doesn’t make a business untouchable, and a good Paydex score doesn’t automatically secure a business deal. Alster explains that since Paydex scores are derived purely from historical information — a company’s record of debt repayments — it’s only a partial indicator of a business’s future likelihood of repayment.

To help businesses make even better-informed decisions, Dun & Bradstreet issues other scores that can be used with Paydex scores. For example, the Delinquency Predictor and Financial Stress scores predict whether a company will cease operations within the next year and can help give a more thorough risk profile.

How are Paydex scores calculated?

Dun & Bradstreet calculates a business’s Paydex score using the last two years of a business’s trade experiences, also known as payment experiences. Trade experiences are records detailing a business’s dealings with “trade references,” which are any suppliers or creditors who report their dealings with the company in question to Dun & Bradstreet. 

While consumer credit scores use information from data furnishers, businesses can self-report their exchanges to Dun & Bradstreet, though this information must be verified. Dun & Bradstreet primarily collects data from creditors, vendors, and other sources of information.

While not every business entity worldwide reports its data, Alster says that a “substantial” number of companies across all industries do so. That means there is a good chance that many, if not all, of the entities a business enters into transactions with regularly report data that Dun & Bradstreet factors into a Paydex score.   

Although the list of companies that report data to Dun & Bradstreet is private, Alster says that commercial payments for anything from a small electric bill to a large business loan could be included.

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How can a company establish a Paydex score?

To establish a Paydex score, you must obtain a D-U-N-S (Data Universal Numbering System) number for your business from Dun & Bradstreet. A D-U-N-S number is like a social security number for your business, allowing you to start building a business credit file. This process is free and can take up to 30 days, though you can expedite the process for $229. 

Once you establish your D-U-N-S number, you generally don’t need to take additional steps to trigger a Paydex score. Alster says that Dun & Bradstreet monitors governmental databases to capture when new businesses are formed and starts aggregating data for those businesses automatically.

That said, Dun and Bradstreet needs a minimum of three reported trade experiences from at least two trade references best way to start calculating a business’s Paydex score is to “have trades” and make payments on time or early, Alster explains. You can do this by opening business credit cards and taking out business loans — as long as making payments on time is feasible.

Alster stresses that business owners should avoid using personal credit for their company because Paydex scores only include commercial transaction history. That means personal loans or using your personal credit card for business expenses won’t contribute to your Paydex score, even if those transactions are made for legitimate business purposes.

How long does it take to get a Paydex score?

There is no “golden rule” about when a new business will receive its first Paydex score, according to Alster. He explains that the more “capital intensive” a business is, the faster it will establish a Paydex Score.  

That means that building a history of commercial debt and payments as soon as possible will help a business get a Paydex score faster, Alster says. For example, some businesses receive a Paydex score before seeing their first client if they invest substantially in equipment and machinery or make payments on a business loan before opening.

Paydex score frequently asked questions (FAQ)

Like building personal credit, improving a Paydex score can take time, but it is possible. The best way to improve a low Paydex Score is to grow commercial credit and pay debts on time or early. 

You can consider opening a new commercial credit card or taking out a business loan. Because Paydex scores are dollar-weighted, paying off a larger debt will have a more significant impact. However, paying all commercial debts promptly, regardless of the amount, will help improve a Paydex Score over time.

Since businesses don’t know which companies report transaction history to Dun & Bradstreet and which don’t, it’s best for businesses to assume that all commercial transactions will be included in a Paydex score, so they should pay all debts on time whenever possible.

A high Paydex score can help businesses access more credit and favorable interest rates, so all companies should monitor it frequently. Businesses can access their Paydex score by purchasing a subscription to Dun and Bradstreet’s credit checker, CreditSignal.

The main three business scores come from Dun and Bradstreet, Experian, and Equifax. All three credit scores range from 1-100, similar to your consumer credit scores from TransUnion, Equifax, and Experian. 

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