The Dun & Bradstreet PAYDEX Score Explained
Just like a consumer’s creditworthiness hinges on a FICO score, a business’s creditworthiness is determined by a scoring system as well. One business credit score that is typically used by lenders, vendors and suppliers to judge whether a business is qualified for different financing products is the PAYDEX score.
What is the D&B PAYDEX score?
PAYDEX is a business credit score that’s generated by Dun & Bradstreet (D&B). Their model analyzes a business’ 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.
A business’ D&B PAYDEX score is used much like an individual’s FICO score. It helps lenders, vendors and suppliers determine whether to approve you for financing and on what terms. Typically, the better the score, the more generous the terms extended. This can save your business money and give you more time to pay for supplies or services, leveling out cash flow.
In order to establish a PAYDEX score, you’ll need a Dun & Bradstreet number, or a DUNS number.
How is my PAYDEX score calculated?
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 Nav’s experience, 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 your IT vendor, with whom you spend thousands of dollars monthly, comprise a greater percentage of your D&B PAYDEX score than your transactions with the carpet cleaner who comes out to steam your rugs annually for a few hundred dollars, for example.
It’s important to note that a Dun & Bradstreet PAYDEX score of 100 does not indicate that a business has made on time payments — in fact, it indicates that a business has consistently paid suppliers 30 days in advance. Here’s a breakdown of what your Dun and Bradstreet number means:
| Paydex Score: | Explanation: |
|---|---|
| 100 | Payment comes 30 days sooner than terms |
| 90 | Payment comes 20 days sooner than terms |
| 80 | Payment comes on terms |
| 70 | Payment comes 15 days beyond terms |
| 60 | Payment comes 22 days beyond terms |
| 50 | Payment comes 30 days beyond terms |
| 40 | Payment comes 60 days beyond terms |
| 30 | Payment comes 90 days beyond terms |
| 20 | Payment comes 120 days beyond terms |
| 1 – 19 | Payment comes over 120 days beyond terms |
 |
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How is my PAYDEX score used?
PAYDEX is primarily used by vendors and suppliers to judge your business when determining what terms to extend on trade credit (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 maintain a PAYDEX score of 75 or higher to ensure qualification for these types of financing.
How can I improve my D&B PAYDEX score?
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.
Want to see your PAYDEX score and start improving it? Nav lets you check your Dun & Bradstreet PAYDEX rating online, for free (no credit card required). You’ll also get tips and insights to make your score stronger, so you can negotiate better vendor terms, save money and more easily manage cash flow.
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Thank You for the insight to the Paydex Score and Scoring strategies.
A viable follow up article would be to post National Stores that automatically report trade lines i.e. Retail Chains, Financial Insitutions.to assist startups in maximizing efficiency and opportunities.
Would a CFPB & OCC Complaint against Wells Fargo for a mislaid commercial acct with accompanying safe deposit box cause a dormant Paydex Score?
My paydex is bogus, D&B knows it.
Dunn and Bradstreet does not report accurately. My business has paid back over $1mm in debt, and pays creditors early as part of tax planning. Yet they report my business pays one day late. Unless you pay them money they jack around with their “credit score”. Which means those with A credit paid for the rating. How accurate can that be?
I agree it’s ridiculous to be penalized for paying your bills on time. But we understand it’s the system ratings they use.
umm, you’re not penalized for paying your bills on time. You’re given more credit for paying before the agreed time.
If you negotiate terms and you fulfill the terms then why are you penalized for doing that? To only receive an 80 for doing what you agreed on is a ridiculous way to score this thing.