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Dun & Bradstreet ratings are the primary sources that lenders check when they want insights into your business’s payment history and money lending track record. They assess businesses and individuals to determine the risk in lending them money (To what extent the likelihood a business or individual will default and not pay back the loan).
Every money lender will use Dun & Bradstreet to assess you and your business before granting you a loan. How you handle your personal and business finances will determine what rating or credit score you will receive. This rating will determine your loan requirements; How much you can borrow, the amount of interest you will need to pay, repayment time and what you can use the loan for.
Keeping your finances in check will give you a higher credit rating and open more reasonable and favorable loan terms as you have been assessed as low risk in not paying the loan back.
Key Points:
- Do I have a Dun & Bradstreet credit rating?
- Is my Dun & Bradstreet credit rating good enough?
- How can I improve my Dun & Bradstreet credit rating?
Types of Dun & Bradstreet Ratings
In addition to the Dun and Bradstreet credit report, the company has a wider range of insights to help lenders better understand a business’s payment history and financial strength.
Here are the main Dun & Bradstreet ratings and risk analysis reports:
D&B PAYDEX
The D&B PAYDEX is Dun & Bradstreet’s most popular credit reporting product. Your company’s PAYDEX number indicates your record of paying bills on time, including invoices, credit cards, and loans, among other key financial indicators. PAYDEX scores range from 0 to 100, with 100 being the best score possible.
D&B Failure Score
A company’s D&B Failure Score helps creditors determine if a business is likely to file for bankruptcy or other legal relief from creditors within 12 months. This Failure Score is known as a dynamic risk indicator. It tracks your company’s ongoing activities to determine any potential risk that indicates your company might not pay back its loan.
D&B Viability Rating
D&B Viability Ratings use various data to rate businesses’ future viability. The exact ways Dun & Bradstreet, Viability Rating scores are tallied is proprietary. Still, the company says it uses “predictive and descriptive” components to determine the chance a company will go out of business, become inactive, or pursue bankruptcy within a year.
D&B Delinquency Predictor Score
The D&B Delinquency Predictor Score offers insight into the potential for a company to be severely delinquent with payments, cease operations without paying creditors, or seek out bankruptcy within 12 months. Dun & Bradstreet qualifies delinquency as being one with 10% of the dollar amount of past-due bills.
Legal Events
D&B also offers tools to help companies see if their business is the subject of any upcoming bankruptcies, lawsuits, liens, judgments, or public legal filings. According to the company’s website, analysts fact-check each post made to your company’s business report, which can help keep erroneous information from reaching your D&B reporting.
What Impacts my Business D&B Rating?
Generally, the biggest factors that impact your company’s D&B rating are your current debts, long-overdue bills, and any pending legal matters concerning your business. Other public information might also play a role.
Your D&B rating also depends on which of your vendors or creditors report back to Dun & Bradstreet. Not all businesses share information with the company.
Dun & Bradstreet Rating System
Dun & Bradstreet’s credit rating is similar to personal credit scores. Every person is assigned a score based on their financial history and current credit. Late payments, underutilized credit, or too much debt can negatively impact your credit rating.
Dun & Bradstreet Rating Classification
To create a numeric value, Dun & Bradstreet the information it gains from your business’s financial history and credit.
Here are the numeric values:
PAYDEX Score: 0-100 (worst to best)
D&B Failure Score: 1-5 (worst to best)
Viability Rating: This report uses four ratings
- Viability scores range from 1-5 (worst to best)
- Portfolio Comparison scores range from 1-9 (worst to best)
- Data Depth Indicator ranges from A-M
- Company Profile uses a scale of A-Z.
Delinquency Predictor Score: 1-5
Dun & Bradstreet Composite Credit Appraisal
Dun & Bradstreet also provides a Composite Credit Appraisal. This appraisal is based on the company’s analysis of crucial financial data, company payments, public records, a business’ age, and other relevant details. This information is distilled into a 1-4 scale, with 2 being the highest number a business can get without supplying Dun & Bradstreet with its current financials.
How are Dun & Bradstreet Ratings Generated?
Dun & Bradstreet typically base their ratings on information companies relay about a business’s credit and repayment history. Dun & Bradstreet also uses other information from the public domain and undisclosed sources.
You’re encouraged to register for a data universal numbering system (or D-U-N-S). A D-U-N-S provides your business with a distinct identity. This number exists alongside your employee identification number, or EIN, which the Internal Revenue Service assigns. Registering for a D-U-N-S number helps boost your score, as it confirms you are who you claim to be.
How to Obtain a Dun & Bradstreet Credit Rating
Creditors can access information about your business’s Dun & Bradstreet ratings, even if you haven’t opened an account with D&B. However, if you wish to know about changes to your business credit scores and rating, you must apply for a D-U-N-S number. Once you receive this number, you should sign up with D&B’s CreditSignal service. Both these services are free.
You can monitor your business credit profile via the CreditSignal program. However, you won’t be permitted to access reports through this portal. To monitor your business’s D&B Rating, you will need to sign up for a credit-monitoring plan (from $149 per month).
How to Improve Your Dun & Bradstreet Rating
To improve your Dun & Bradstreet rating for your business, you can register an account for your business: this will boost your score because you’re helping the agency verify the information on file.
Moreover, you can audit your company’s own experience with credit. In addition, lenders usually consider criteria known as the “five Cs of credit.” You can work to improve your business’s five Cs.
Here are the five Cs of credit outlined:
- Character: Your business reputation for repaying debts
- Capacity: Your business’ ability to repay a loan
- Capital: The number of liquid assets your business has
- Collateral: What (and how much) you can offer to secure a business loan
- Conditions: Details about how long a business has been in operation, company financial statements, owners’ credit history, etc.
Dun & Bradstreet Rating: The Bottom Line
The key to a strong Dun & Bradstreet rating is good credit. You can sign up for an account and take an active role by monitoring your business credit, but ultimately the work lies in building or improving your business’s credit history.
Remember that there are options if you’ve seen your Dun & Bradstreet rating and aren’t sure you’ll get approved for a loan. Some lenders are willing to work with businesses that don’t have excellent credit. Upstart is a suitable option for many applicants.\
If you're looking for more lenders like Upstart, you might like to visit our list of the best small business loan lenders for bad credit.
