Glossary · Credit management
Business credit score
A business credit score is a rating from a credit reference agency that summarises how likely a company is to pay its debts on time.
Business credit scores condense a company’s financial filings, payment history, court judgments and other public data into a number or a band. Each agency uses its own model and scale.
One well-known example is Dun & Bradstreet’s Paydex score in the US, which runs from 1 to 100 and is based on how promptly a business pays its suppliers. A score of 80 means bills are paid on time; higher means they are paid early.
Scores are a good screen for new customers and an early warning on existing ones, but they lag reality. A company can pay its suppliers on time right up until it can’t.
Example
A US supplier checks a prospect’s Paydex score: 50, which indicates payments around 30 days beyond terms. It offers net 15 with a deposit rather than net 30.