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As a small business owner, you already know how important it is to stay on top of your credit. However, you may not know much about your PAYDEX® Score and what it means for your small business. According to Dun & Bradstreet®, your score is the “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 score ranges from 0-100, with a score of 90 or above indicating an excellent payment record and below 70 signaling a poor performance. It is critical to understand your PAYDEX® Score since it directly influences your ability to obtain financing to fuel the growth of your business. Read this Balboa Capital blog post to learn three tips to boost your PAYDEX® Score.
1. Pay your bills early.
Since your PAYDEX® Score is directly related to your payment history, paying bills as early as possible is the best way to improve it. However, simply paying bills on time will not necessarily increase your score. You must pay before the invoice is due to help improve your score. For example, to elevate your score above 80, you would typically need to pay your bill before the invoice is sent.
2. Monitor your credit regularly.
Be diligent in monitoring your business credit history and address any errors you may find, such as falsely reported past-due accounts. Confirm that your payment performance is accurate, and be sure to follow up with creditors on any discrepancies.
3. Keep your credit active.
Keeping your credit lines active, like a personal credit profile, can help boost your business’s credit score. For example, you may have a score of 75, which is equivalent to a 700 FICO® Score, but if there is no continuous business credit activity, your score may decrease.
Summary.
By improving your PAYDEX® Score before you apply for small business funding, you will be in a better position for borrowing. We hope this has you thinking about ways to improve your PAYDEX® Score and your overall business credit performance. Being proactive about your business and personal credit profile can help you secure growth capital when needed.
Balboa Capital, a Division of Ameris Bank, is not affiliated with nor endorses Dun & Bradstreet, PAYDEX, or FICO. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.