What Is a Good PayNet Score and How Does Your Business Earn One?
There is no universally accepted “good” Paynet Score. Yet lenders that use PayNet Scores will typically consider a PayNet MasterScore of 700 or higher to indicate a low level of credit risk.
PayNet® is a business credit reporting agency that maintains a database of more than 25 million small business contracts — small business loan accounts, business leases, and business lines of credit.
In 2019, the company was acquired by a major business credit bureau (Equifax). But PayNet still operates as its own independent division underneath the Equifax corporate umbrella.
As a small business owner, your company’s PayNet Scores could impact your ability to qualify for various types of business financing. Therefore, understanding how PayNet Scores work and the information that influences them is important.
Having a good PayNet Score could propel your business forward, but a bad PayNet Score could hold it back.
PayNet Score Ranges
When a lender purchases a PayNet Business Credit History Report on your business, the report will include a copy of your company’s PayNet MasterScore® (assuming you have one). The PayNet MasterScore features a range of 500–800.
The PayNet MasterScore predicts the likelihood that a business will default (i.e., become 90 days delinquent or worse on a credit obligation). And just like with a consumer credit score, a higher PayNet Score indicates that there is less risk of a default happening.
Lenders use this information to control their default rates and to make sure they’re making a wise credit decision with each borrower that applies for a small business loan or other business financings.
Here is a chart that shows how lenders might interpret your PayNet MasterScore. The “bad rate” below is essentially a measure of how likely your business is to pay a credit obligation 90+ days late.
PayNet MasterScore RangeCredit Risk DescriptionBad Rate700-800Low1.1% or Less660-699Low to MediumLow-Medium630-659Medium4.1%-9%590-629Medium to High9.1%-21%500-589HighGreater Than 21%
Just like with personal credit, your business needs to build credit in order to qualify for a PayNet Score.
A “null” PayNet MasterScore signifies to lenders that your business does not have a business credit profile established with a business credit bureau. If no credit information is available on your business, it won’t be eligible for a PayNet Score.
How the PayNet Score Is Calculated
Your PayNet Score is based on the details that appear on your PayNet Business Credit History Report.
Information outside of your PayNet business credit profile (like consumer credit details and more) will not influence your PayNet Score. In total, the PayNet MasterScore uses 587 different variables (135 unique variables) in its business credit scoring models.
In the consumer credit and business credit world, credit scoring models are designed to ask questions about the information on your credit report. The question is called a characteristic. The answer to the question is a variable.
For example, the question, “Are there any late payments on the credit report?”, would be a characteristic. Potential answers to this question — yes or no — are variables. And those variables determine how many points you earn to be added to your overall score.
PayNet doesn’t reveal the exact characteristics it considers when it calculates your company’s PayNet MasterScore. No credit scoring company shares that type of information because it’s proprietary. Nonetheless, the factors below may have an influence on your PayNet score:
Payment History
Frequency of Late Payments (If Applicable)
How Recently Late Payments Occurred (If Applicable)
Defaults on Credit Report
Negative Public Records
Amounts Owed on Outstanding Debts
Time in Business
Size of Business
Years of Experience Borrowing
Number of Employees
Annual Revenue
Type of Business (LLC, Corporation, etc.)
Borrower Industry (NAICS Code)
How to Improve Your PayNet Score
A good PayNet Score will be in the eye of the beholder. In other words, the lender you wish to borrow from will set its own approval criteria that your business needs to meet to qualify for a small business loan or other form of business financing.
And if a small business lending institution uses a PayNet Score to evaluate credit applicants, it may set a minimum score that you need to achieve as well.
You can use the chart above to see where your business credit score falls on the PayNet MasterScore scale. If your business credit score indicates medium or high risk, you may want to work toward improving those numbers.
The following actions could potentially help you improve your PayNet Score:
Establish accounts with companies that report business credit history to PayNet Inc. Some options to consider here may be working to build business credit with a business credit card, vendor accounts (aka trade credit), and business credit builder loans. CreditStrong Business reports business credit builder accounts to PayNet, Equifax, and the Small Business Financial Exchange (and soon, to Dun & Bradstreet and Experian Business as well).
Make timely payments. Even an occasional delinquency (aka late payment) might damage your business credit score, including your PayNet Scores. But if you make a habit of paying your credit obligations by their due date (or, better yet, paying them early), your business credit score should benefit.
Have patience. As your business grows in age and experience, you may see your score trend upward (depending on the information on your credit report). A business that is older and has stood the test of time tends to represent a lower credit risk from a lending perspective.
As a borrower, a higher PayNet Score could improve your business’s chances of qualifying for financing like a business loan, business line of credit, business credit card, equipment financing, and more.
Good business credit scores might also help businesses lock in better borrowing terms, such as lower interest rates and fees, higher loan amounts, and more generous repayment terms.
(Note: Your personal credit score and personal credit report may also influence how a lender views your overall creditworthiness.)
It can take a lot of effort to build a healthy business credit report and earn good PayNet Scores. Yet the benefits of a good business credit score make the hard work worthwhile.
The ability to secure affordable business funding can open doors for your business. It can also make it easier for you to keep your company’s doors open during difficult times.
The post What Is a Good PayNet Score and How Does Your Business Earn One? appeared first on Credit Strong.
Welcome to Billionaire Club Co LLC, your gateway to a brand-new social media experience! Sign up today and dive into over 10,000 fresh daily articles and videos curated just for your enjoyment. Enjoy the ad free experience, unlimited content interactions, and get that coveted blue check verification—all for just $1 a month!
Account Frozen
Your account is frozen. You can still view content but cannot interact with it.
Please go to your settings to update your account status.
Open Profile Settings