A Look at the Dunn and Bradstreet Business Credit Scoring System

Sean Hawley

What is the Dunn and Bradstreet PAYDEX Score?

The PAYDEX® score is a business credit score that’s generated by Dun and Bradstreet (D&B). Their model analyzes a business’s payment performance (i.e., if it pays its bills on time) and gives it a numerical score from 1 to 100, with 100 signifying a perfect payment history.

PAYDEX Score Calculation

To determine your business’s PAYDEX score, Dun & Bradstreet gathers data from the suppliers and vendors with which you do business over a rolling 12-month period. Each supplier/vendor is considered a tradeline account, and the payments you make to that supplier/vendor is considered a payment experience. According to Dun & Bradstreet, two tradelines with at least three credit experiences are needed for a PAYDEX score; however, in most cases, business owners need at least three tradelines reported to create a score.

Dun & Bradstreet analyzes the promptness of your payments against the terms of sale for each payment experience. So, the faster you pay your bills, the better your score.

PAYDEX scoring is dollar-weighted, which means that each payment experience is weighted in terms of the number of transactions and the overall dollar value of those transactions. That means your transactions with a factoring company, for example, would comprise a greater percentage of your D&B PAYDEX score than your transactions with say a mechanic shop that you only visit occasionally (hopefully).

PAYDEX Credit Score Range

It’s important to note that a PAYDEX score of 100 does not indicate that a business has made on-time payments. It actually means that a business has consistently paid supplies 30 days in advance.  Here’s a breakdown of what your PAYDEX score means:

Typical Uses of PAYDEX Score

PAYDEX is primarily used by vendors and suppliers to judge your business when determining what terms to extend on (e.g., net 30, net 60, etc.) This is important because having more time to pay your bills can help you better manage cash flow.

Lenders and creditors can also consider your PAYDEX score before extending lines of credit or loans to your business. You should aim to get to and maintain a PAYDEX score of 75 or higher to ensure you have access to capital which allows your business to remain solvent and grow.

Since your PAYDEX score is based entirely on the promptness of your payments to vendors and suppliers, the only way to improve it is to make sure you are paying on time. Remember: paying on time will only earn you a score of 80. For a perfect PAYDEX score of 100, you need to pay early.

You should also make sure you have at least three open tradelines to generate a PAYDEX score on your business. Having no PAYDEX score is just as bad as having a low one.

BLF has experts with decades of experience assisting business owners with establishing and building business credit. If you would like to apply for a free consultation with one of our credit advisors, please click below.

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