In the financial world, your business credit score, often referred to as Paydex Score, is the basis for everything. This is a reflection of the efficiency of the company’s internal process, its buying power and also its reputation in the eyes of creditors or lenders.

In a time like when there is a global financial crisis, companies are desperate to keep their business credit score in decent ratings - especially so if you’re a small business owner in need of business financing.

If you are looking for ways on how to improve your Paydex credit score, here are some useful tips:

1. Keep your business credit profile in order. Be aware of this; make sure everything is correct and consistent. If you find inconsistencies and inaccuracies, be sure to correct them or have your bank involved if it concerns them. Agencies like Dun and Bradstreet and Experian offer customer online tools for update these details regularly.
2. Relevant trade references should be represented. If you have a long-standing relationship with a supplier or service provider and there have been no delays on the payment schedules for them, put this is in your business profile. If you are doing large business with the companies, this should be on your credit profile. You can update this twice a year.
3. Personal finances should be kept in good records. If you have a new company and you wish to apply for credit, your credit score will be considered by companies as a basis for your creditworthiness. Until your company is able to establish a credit reputation, your consumer credit profile will be reviewed.
4. Pay on time. Late payments to other companies will lower your company’s credit rating. Because of this, you should pay within the net terms set by your suppliers.
5. Compare your credit score with other companies and search for key indicators. This will allow you to see any areas that your are lacking on and be able to gauge your level compared to your counterparts.
6. Keep your debt financing down. A company’s balance sheet filled with debt will lead companies to conclude that you may be a risk for their business too.
7. Build your own profile. Make it more detailed, some credit managers prefer that. Supporting information is also important for them to asses the risks in a broader perspective.

Keep in mind that being responsible is what your business credit report is all about. Since Paydex Score is a measure of your credit business worthiness, it’s obvious that you need to build your score early and keep it high at all times.

When hard times hit your business, it is comforting to know that your past good credits can save your business from untimely closure.

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A stable standing in the side of Paydex score is necessary in order to make use of the financial benefits that are offered by most of the lenders.

If you have established, this will enable you to get financial assistance from the lender with much reduced interest rates. The re-payment can be made in installment.  This is not an easy task. A great care and vision is important to build up a good business concern.

If you have a record that is not beneficial to show your bank on your financial status, you have to try hard to build up your business status to a good level.  The financial assistance can be obtained only after you build up the business with a steady growth.

Building your Paydex score is necessary. Credit Identity can be shown only then.  By establishing as an LLC or a corporation is necessary. These two are the base requirement to build up a business.  Most of the lenders are giving preference to these institutions.  A quick and fast approach to the lenders can be achieved if you are an LLC or a corporation.

Big companies like Bradstreet and Dun has the records of payment of credit bills through their Paydex scores. A figure is shown from 0-100.  The score is more and sufficient, if you are rated closer to 100.

If you establish a good Paydex score there are chances that a loan can be applied to, to commence the business.  You can choose a secured loan, by pledging properties and assets as a security against the loan.  A maximum amount could be borrowed depending on the value and at a reduced rate of interest.

Another loan is unsecured loan.  In this loan one need not surrender the assets to the lenders.  The risk when compared is more to the lenders in this type of loan.  The restriction in granting this loan is much higher and the lender will enforce strict rules and levy higher rate of interest on repayment installment scheme.

There is another credit type used in business concern.  Given below some of the credits you make avail yourself from lenders in your business place for the purpose of building your Business Paydex Score.

1. Credit Card for Business.

Business credit card is different from credit card that is offered to a personal.  The offer of lower interest rate is advantage in using a business credit card. (APR).  The interest rate will vary according to the amount obtained for the month.

2. Term Loans

This loan can be obtained from a lender and the amount that can be borrowed is limited.  It is added with interest and the payment period is about 5 years or more depending on the amount of repayment.

3. (LOC) Lines of Credit

The period of operation in the business is taken into account when a loan is considered.  A fix credit amount can be arranged with the bank.  This will assist you to settle bill that arise in an emergency during the course of the business.  The rate of interest depends on the amount of money you have to pay and will decrease according to the settlement of the debts.

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 Paydex Score ranges from 0 to 100, with 90-100 as excellent scores; 80 and below as good; and 70 and below as bad scores. For obvious reason, higher scores indicates better payment performance.

Paydex isn’t FICO score but are similar in a way that both are used to determine whether you’ll get a credit and on what terms.

Paydex is essentially the business equivalent of your personal credit score.

While individual credit score take a number of factors into consideration, Paydex is calculated based one single factor - whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment.

A score of 80 and above is considered favorable - that is they pay on time. Today most lenders and suppliers are looking for a score of 70 and higher. As a business owner, it is up to you to ensure that you reach a score of at least 80 and above to enjoy good standing.

How to Improve Your Paydex Score?

There are ways to improve your score but firstly, build your Paydex score at least three to six months prior to your getting a loan. What you can do is to apply for a D-U-N-S® number - a nine-digit business identification number. D-U-N-S® number enables potential customers, suppliers and lenders to easily verify your credit worthiness make it easier for them to do business with you and and use it to establish a small line of credit with a company that automatically reports to D&B.

One of the best ways to raise your Paydex score is to frequently pay all of your bills early whenever possible. For instance, to raise your score beyond 80, you must pay ahead of time since your score is directly related to how you pay your bills.

In other words, if your creditor gives you 30 days to pay, make an effort to pay 10 days in advance. Such practice will push your score above 80.

Yet another effective strategy to raise your score is to apply for a secured business credit card to pay for small business expenses. What’s more important here is the practice of paying your credit card balances ahead of time - consistently. By doing so, you can improve your score in just a few months.

However, it’s important that you find a credit card that would report your payments to the major business credit bureaus as that is the only way you can raise your Business Paydex Score.