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PAYDEX Scores: What To Know

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Content was accurate at the time of publication.

As a business owner, you’ll need to focus on building your business credit score, including the PAYDEX score from Dun & Bradstreet. Like a personal credit score, your PAYDEX score measures your business’s record of on-time payments and serves as a good indicator of your business’s overall creditworthiness.

Read on to learn more about what PAYDEX scores are, how they’re used and how to improve yours.

A PAYDEX score is a business credit score reported by the firm Dun & Bradstreet (D&B), tracking how often a business pays its vendors and suppliers on time. Scores range on a scale of 1 to 100, with higher numbers indicating a lower risk of late payment. A score at or above 80 shows that a business tends to pay its obligations in advance of their due dates. A score between 50 and 79 suggests that payments are made within a month beyond term, while a score below 50 shows that a business tends to pay its debts much later than the agreed-upon terms (as many as four months or more).

Unlike personal credit scores, PAYDEX scores only factor in the timeliness of payments made to vendors and suppliers from the past two years, with a greater emphasis on larger payments, and the date of last sale to the vendor must have been within the last 36 months. Payments must be reported to D&B in order to count toward PAYDEX scores.

In order to set up a PAYDEX score, businesses must register with Dun & Bradstreet and receive a D-U-N-S number. This number is a form of identification for the business and can be used by lenders and other companies to find and report information like the PAYDEX score.

Here’s who would use your PAYDEX score and why:

  • Landlords: Before entering into a lease agreement, commercial real estate landlords will likely check a PAYDEX score in order to determine if your business is at risk for delinquent rent payments.
  • Lenders: When determining whether to approve a business for a loan, or even a credit card, lenders may check your business’s PAYDEX score, which can also help set interest rates and terms for a small business loan.
  • Suppliers: If a vendor seeks to enter into an agreement with a business, they’ll want to make sure that your business has a strong record of making payments by their due dates.
  • Insurance companies: Insurance companies that enter into agreements with companies for business insurance may set their premiums based on your company’s PAYDEX score.
  • Customers: While a PAYDEX score may not directly apply to the transactions between a business and its customers, those customers may want to know if your business has a track record of making late payments on its financial obligations.

PAYDEX scores are calculated by compiling a business’s payments to suppliers and vendors on a rolling basis. Each supplier or vendor is considered a “trade reference,” and each trade reference must provide its details to Dun & Bradstreet in order for that trade to be considered as part of the buyer’s PAYDEX score. Each payment is recorded as a “trade experience”; however, some transactions, including credit card payments, don’t get counted as trade experiences.

D&B requires at least three trade experiences from at least two different trade references to calculate a PAYDEX score. Not all vendors automatically report trade experiences to D&B, so in order to establish a PAYDEX score, a business must ensure that those minimum reporting requirements are met.

Not all trade experiences have the same impact on a business’s PAYDEX score. Transactions are dollar-weighted, meaning that a greater emphasis is placed on transactions with a higher dollar amount — a $100,000 invoice would be more impactful than a $1,000 invoice, for example.

More emphasis is also placed on recent trades. By weighing more recent and larger transactions, the PAYDEX score presents more valuable information to interested parties. A late payment on a substantial transaction within the last month would hypothetically matter more than a small, on-time payment from several months ago if a lender is deciding whether to approve a business for a loan.

PAYDEX’s scores range from 1-100, with scores 0-19 meaning a business makes payments more than 120 days beyond the payment term agreement. A score of 100 indicates that the business makes payments 30 days or more before payment is due.

According to Dun & Bradstreet, a PAYDEX score of 70 or above is considered a “good” score, with businesses issuing payments within 15 days beyond payment terms. Scores of 80 or above are great scores, indicating consistent prompt and on-terms payment.

100Payment 30 days sooner than terms
90Payment 20 days sooner than terms
80Payment on terms
70Payment 15 days beyond terms
60Payment 22 days beyond terms
50Payment 30 days beyond terms
40Payment 60 days beyond terms
30Payment 90 days beyond terms
20Payment 120 days beyond terms
1-19Payment over 120 days beyond terms

In order to check your PAYDEX score, you’ll need to purchase a report through D&B. A subscription to D&B’s Credit Insights Basic costs $49 per month and allows you to view multiple credit scores, including your PAYDEX Score.

The company also offers a Plus subscription for $149 per month that allows you to review all of your Dun & Bradstreet ratings and submit payments, bank statements and financial statements to be reviewed for inclusion to your file.

Can I check my PAYDEX score for free?

No, but you can get some information on your score for free. Dun and Bradstreet offers a free tier for their Credit Insights program, but it won’t show you your PAYDEX score. Instead, it shows a risk range indicator – a general idea of whether your score is in a healthy place and if it’s gone up or down – but not the exact number.

The Fair Credit Reporting Act (FCRA) ensures certain protections of a consumer’s right to ask a credit reporting agency for their credit score (there may be a charge for this information) and access a free copy of their credit report annually. However, business credit reporting is not covered under the FCRA, which means D&B isn’t obligated to provide it.

A low PAYDEX score indicates the business typically doesn’t make payments according to the agreed payment terms. Bad PAYDEX scores can be a red flag for other businesses you may want to partner with, as late payments can directly impact their cash flow management. 

Businesses with a bad PAYDEX score may struggle to acquire loans, sign top vendors or secure commercial real estate rentals on their desired terms. Examples include:

  • Difficulty securing full funding. Businesses may not be approved for the full amount requested after applying for loans or credit lines.
  • Less desirable terms. Bad PAYDEX scores can result in financing with higher interest rates, higher insurance premiums, increased late fee penalties and stricter payment or contract terms.
  • Rejection from top partners. Businesses could be rejected completely from the vendors, lenders, suppliers and landlords of their choice due to a low PAYDEX score.

If you have a low score, there are business loans for bad credit available, which may include secured loans, term loans, invoice factoring or equipment financing. But generally, a lower score means fewer financing options.

Here are a few ways you can help improve your business credit score

  • Pay your bills early: As long as the trade experiences are reported to and approved by D&B, paying your bills before they’re due will help boost your score. On-time payments will also help, though not as much. Prioritize paying large invoices early, as they carry more weight in PAYDEX’s algorithm.
  • Keep your credit utilization low: Having credit available, but using a low percentage of that credit is a good way to maintain a good business credit score. A good rule of thumb is to keep this number to 30% or less.
  • Ask suppliers to report to Dun & Bradstreet: Some vendors may not automatically report to D&B, but you can ask them if they’ll submit the trade experiences to the firm. Increasing the number of on-time or early payments reported to D&B will help your PAYDEX score.
  • Open tradeline accounts: Every reported vendor relationship is a tradeline, and opening additional tradelines can help you build a stronger PAYDEX score as long as payments are made on time.
  • Don’t mix personal and business credit: In order to build your business credit, it’s important to keep your business and personal credit separate. Make sure that your business transactions are made only through business bank accounts and credit lines, which can get reported as part of your PAYDEX score.
  • Dispute inaccurate reports: If delayed payment experiences are showing up on your PAYDEX report that aren’t correct, you can dispute them. D&B may reach out to the vendor to research the dispute. Reports found to be inaccurate can be corrected, potentially improving your score.

While most lenders run business credit checks during the application review process, it is possible to get a loan or line of credit without a PAYDEX score.

If you don’t have a PAYDEX score, however, many lenders may have business loan requirements specifying that owners personally guarantee the loan. Negative business activity — such as missed payments or defaulting on the loan — will impact your credit score directly.

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After a business acquires a D-U-N-S number (which can take up to 30 business days), trade suppliers can submit data. The time it takes to establish a business’s PAYDEX score depends entirely on how long it takes Dun & Bradstreet to receive reports on three trade experiences from at least two reporting parties.

What other business credit reporting scores are there?

In addition to the PAYDEX score from Dun & Bradstreet, other business credit score reporting agencies include the FICO Small Business Scoring Service (SBSS) and the Experian Intelliscore Plus.