One of the most important sections of your D&B Business Credit Report is the payment summary section. There are two scores in this section that are critical to the report and can separate a good report from a bad one. While the two scores – the PAYDEX score and the P.D. score key – are related, they deal with separate issues that you need to know and understand.
Your PAYDEX score is a statistical measure of your business creditworthiness… your ability to pay your debts… similar to your personal creditworthiness FICO score. A P.D. score Vegasgoal of 80 is similar to that of a 700 personal FICO score.
You’ll need a P.D. score of 80 to obtain the most favorable financing… meaning you pay all your bills on time.
To obtain a P.D. score, you need at least five trade accounts reporting to your file… but the score itself is calculated by using as many as 875 payments.
You will also want those accounts to report favorable payment history. If you pay your bills on time, they will. If you pay your bills late, your P.D. score will drop.
Depending on how early or late you pay your bills, your P.D.score will adjust accordingly. If you pay early, then you can achieve a score that is over 80.
How timely you pay your bills (your P.D. score) is a good indicator to lenders of how likely you are to pay your bills in the future. Lenders look at this score carefully when deciding whether or not to give you a loan.
Getting a PAYDEX score key of 80 means you have a perfect score. When you pay all your bills on time, meaning on or before the due date, you’ll get a perfect score. Remember, to get this score, you need to have 5 trade references reporting to D&B on your company.
Admittedly, this can be one of the most difficult credit-building requirements to meet…because you’re at the mercy of your vendors to bother reporting. One of the best things you can do here is ask your suppliers for 30-day payment terms… and ask them to report your payment history to Dun & Bradstreet.
WARNING! There are “services” that promise to get this process done for you in one month. What they do is have their vendors report an excellent payment history even though you’ve just started with them. DON’T DO IT! THIS IS BLATANT FRAUD… AND THEY’LL CHARGE YOU UP TO $2,000 OR MORE TO PROVIDE THIS “SERVICE”.
Here’s another important aspect of the PAYDEX system that most business owners don’t know about. PAYDEX is a “weighted average” score… giving more weight to the trade accounts that report higher amounts of credit extended and less weight to trade accounts that are reporting lower dollar amounts of credit. So what does that mean to you?