Simply a Paydex score does NOT mean much as far as establishing business credit the proper way. A basic paydex score of 80 simply indicates that you have like three tradelines on your credit report. Without getting too technical; A Paydex score takes into account the number of tradelines & how well the tradelines were maintained (payments).  Many will tell you to start applying for business credit after you get an 80 score. No wonder these same people will tell you that you would ALWAYS have to PG (Personal credit guarantee) business credit.


On the other hand D& B rating is what tells the real story.  The ratings take into consideration many different factors: number of employers, net worth etc , etc. To me a good D&B rating is equivalent to having a great business credit file. Usually D&B will not give your business a rating straight away. It might take a couple of months.  Diverse lines of credit, UCC filings, repeat business, payment history all play a part. This is especially true in this economy. Moreover, most lenders will look at your report and try to “read between the lines”. They will look at aspects that show the stability, history, future potential etc. As I always say, if you want to develop business credit your aim should be cash lines of credit. You should have the ability to withdraw cash and not pay interest for months (0% introduction rate). Now that would give you tremendous investing opportunity, wouldn’t it.


A strong business credit file has varied lines of credit, great payment history.  It usually has a strong presence on the web. A strong business credit file might also have to maintain some type of compliance issues (business license). All of  these factors can easily be put in place to increase the chances of getting business credit.


If your goal is to get quick credit using a business than by all means, wait for a 80 Paydex and apply for a PGed (personal credit guaranteed) business card; but then remember that will only be an extension of your personal credit.  You can never tap into the full potential of business credit using that method. Feel free to ask me any question.

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Aimanzul

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