For a new business credit score monitoring is a “must do” task in order to protect the firm’s ability to borrow at competitive interest rates or to borrow at all. To understand the important of credit score monitoring, a business owner must understand how a business credit profile gets built, what the score means and who looks at it.

Your Business Profile

Any business that borrows will have a business credit profile that results in a business credit score. Many firms track business profiles but the main business profile bureau is the Paydex system administered by Dunn & Bradstreet.

Paydex works for a business much as the FICO score from the Fair Isaac Corp. works for a personal credit score. The FICO score ranges between 300 and 850 and takes into account a variety of factors. The Paydex score ranges from zero to 100 and is based on your business’ track record of on-time debt repayment.

Monitoring Your Score

The Paydex score ranks how late or early you are on average in making debt payments. A score of 70 means your firm is 15 days late, and that is considered a poor score. A score of 80 means your business is on time in making debt payments according to the terms of its loans. A score above 80 means the business anticipates upcoming debt payments and makes them in advance.

Lenders and Paydex

Business lenders will expect your business to have a Paydex account, which is logged under a Data Universal Numbering System number that a business applies for from Dunn & Bradstreet and pays for. Credit score monitoring by a business is vital because every lender considering lending to your business will check your Paydex score. You will want to know what lenders are going to see before they see. Credit counselors advise building your Paydex score three to six months in advance of applying for a loan. This can be done with a business credit card or through a charge account with a supplier. Just make sure the lender reports to D&B.

Improving Your Score

Credit score monitoring is also important because it will alert your business when the score needs to be improved. You can raise a low score, but as with a personal credit score, it takes time and consistent good loan repayment habits.

The simplest method of improving your business credit score is to pay ahead of the schedule payment dates on loans. Remember, a score of 80 means your business pays on time. By beginning to pay early, the business credit score can move up.

Keep Watching

Even if you have built a strong Paydex number, credit score monitoring still pays off in two ways. First, mistakes happen. Lenders report your repayment habits to Dunn & Bradstreet and errors can occur. Know your own repayment habits and ensure your Paydex score reflects that. Second, your score can drop even if you have a history of paying on time. If there is a period when you do not need credit, a long period of borrowing inactivity can lower your score. Credit score monitoring can alert you to

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