Paydex Score
Paydex Score
Most of us know what a FICO scoring system is--it ranges from 450-850 in the personal credit rating system. Did you know that business credit uses a different scoring system completely called the PAYDEX which ranges from 0-100? An 80 PAYDEX score is approximately equal to a 750 FICO score and is considered excellent corporate credit.
Your business credit will be solely identified by your unique EIN# which is obtained from the IRS. To obtain an 80 PAYDEX score as a business owner you will need to acquire a minimum of 4 separate creditors reporting to your business credit profile plus 2 months of payment history from these accounts. Once this 4 to 2 ratio (4 accounts plus 2 months history) has been established, Dun and Bradstreet, or DNB as they are called, will issue your company an 80 PAYDEX score BUT it will be rated as a WEAK 80. This means you have only met the minimum requirements. However, upon completion of all the necessary steps that I teach, within 12 months, you will have 15 accounts/line of credits established, raising your business rating to A+. This crucial progression will open many doors for you and your opportunities with future creditors.
Once you understand the basics of business credit scoring you will need to register with the credit bureaus. First, go to www.dnb.com to register with Dun and Bradstreet. Dun and Bradsteet is the largest business credit bureau in the U.S. DNB set the standard for business credit scoring and they hold the most power with your potential creditors.. The Dun and Bradstreet website is where you will create your business credit profile. which is simply a matter of entering your company information and requesting that they assign your business a DNB or DUNS number. There is no fee for this service. The information you submit should match your incorporation paperwork. The following are some key differences between personal and business credit:
CREDIT LIMITS AND RATIOS
I bet you didn't know that one of the biggest differences between business credit and personal credit is the amount of credit you can use percentage-wise within each credit line. In terms of personal credit, if you exceed 35% of the issued line of credit, it will lower your FICO score. If you have a personal Visa with a $5000.00 credit limit and charge $3000 (or 60%) of that available credit, you will lower your FICO score 30-40 points. However, in the business credit industry, it is expected that a business owner will fully use their business credit lines. The ONLY thing that lowers or raises your PAYDEX score is your payment history! Early payments can actually increase your PAYDEX score.
PERSONAL CREDIT MORE FORGIVING
Another major difference is that personal credit history is more forgiving. If you have any derogatory items on your personal credit history, it is possible to repair your credit score. Regardless, these items will eventually come off your report within 7-10 years.. This is not the case with business credit. If you have a negative entry reported to your business credit profile and it is indeed true and accurate, you can never remove it from your credit report! It only takes 3-4 negative entries to your business credit profile to ruin your business credit forever. Your only solution at this point would be to reincorporate under a new business name and begin the process of building business credit all over again. Buy the ultimate steak knife You want a pool: How will you pay for it? Deciding On Whether to Buy Army Surplus Goods How to Be a Successful Bidder for Online Shopping? Why Most Of The Buyers are Attracted To Traditional Galileo Thermometers? Be well-versed with your state's prompt pay laws Pay as You Go! To Buy Pandora Battery Or Not To Buy Decisions, Decisions - Buy Here Pay Here Lots The quality of the delivery is wrapped up with the service when shopping online Why Should You Buy Siebe Gas Valves? Online Retail Shopping at an Online Shopping Mall Website Saves Time and Money How to Buy an External Hard Drive