Four Tips for Establishing and Building a Corporate Credit Score – Paydex Score

Are you in the process of obtaining financing for your new business or your current business? Before you start applying for loans, make sure you have what lenders are looking for. One of the most important elements in acquiring loans from banks or commercial lenders for your business is your corporate credit score, or paydex score. If your business does not have established corporate credit, you should start immediately.

Paydex is a term used in business, for a numerical score given by D&B to Business as a credit score for the promptness of its payments to creditors. Business lenders use this score similar to how the Fico score is used for individuals. A high paydex score is considered healthy for a company. You need to establish corporate credit so you can get small loans when you need them. Having a separate business credit profile helps limit your personal liability and protect your personal assets.

Here are some tips for establishing and building corporate credit:

1. You must have the right business structure. The sole proprietorship will not be able to build business credit. Create a corporation or LLC.

2. Get an Employer Identification Number, also known as a Federal Tax ID, is similar to a Social Security number for your business.

3. Register with credit reporting agencies.

4. Get business referrals and retail credit

How to establish corporate credit is a step-by-step process. Once you’ve established a strong corporate credit profile for your business, you’ll increase your chances of getting loans. A score of 80 or higher is great for your business. For the best result, you should have strong corporate and personal credit. If your personal Fico score is low, you can start to fix it while you build your corporate credit score. As a smart business owner, you need to build separate corporate credit. Instead of applying for loans in your personal name, start applying for loans in your business name.