When it comes to securing business financing, creditworthiness plays a significant role in determining whether you’ll be approved for a loan, line of credit, or vendor credit. While many business owners focus on personal credit scores, business credit scores, like the one from Dun & Bradstreet (D&B), are equally important in establishing your business’s ability to repay debts and manage financial obligations.
In this guide, we’ll explain what the Dun & Bradstreet score is, how it’s calculated, and why it’s crucial for your business’s financial success.
Dun & Bradstreet is one of the largest credit reporting agencies for businesses, providing a credit score known as the D&B PAYDEX® score. This score is used by lenders, suppliers, and other businesses to assess your company’s creditworthiness and determine your reliability as a borrower or business partner.
The PAYDEX® score ranges from 1 to 100, with higher scores indicating a better credit history and lower risk of defaulting on loans or payments.
Payment History: Your ability to pay vendors, suppliers, and creditors on time.
Credit Utilization: The percentage of available credit your business is using at any given time.
Length of Credit History: The longer your business has had credit, the more information Dun & Bradstreet can use to assess your reliability.
Outstanding Debt: The total amount of debt your business currently holds.
Dun & Bradstreet calculates your PAYDEX® score based on your payment history with vendors and suppliers, primarily using information from your business’s trade credit reports. Here’s a closer look at the calculation process:
This is the most significant factor in determining your PAYDEX® score. D&B looks at how timely your payments are to your suppliers and creditors. If you consistently pay on time (or early), your score will improve. If you have late payments, your score will suffer.
Your credit utilization ratio refers to how much of your available credit you’re using. A high ratio of credit usage compared to your total available credit can negatively impact your score.
A longer credit history provides more data for D&B to assess the reliability of your business. Newer businesses may have a harder time building a strong PAYDEX® score until they establish a solid history of timely payments.
Dun & Bradstreet also looks at your public records, such as any bankruptcies, liens, or judgments, which can significantly damage your business credit score.
Your Dun & Bradstreet PAYDEX® score can range from 1 to 100, with each range having specific implications for your business:
1-49: Poor — This indicates your business has significant payment issues and poses a high risk to lenders and suppliers.
50-69: Fair — Your business makes payments, but occasionally late. You may struggle to qualify for favorable terms.
70-79: Good — Your business makes payments on time or nearly on time, indicating financial reliability.
80-100: Excellent — Your business consistently pays bills early or on time, which can help you secure favorable loan terms and credit limits.
A higher PAYDEX® score makes your business appear more creditworthy to lenders and vendors, which can lead to lower interest rates, larger credit lines, and more favorable business terms.
Lenders and investors often rely on your Dun & Bradstreet score when deciding whether to approve your loan application. A strong score increases your chances of securing financing, as it demonstrates your ability to manage debt and repay loans. On the other hand, a low score may make it more difficult to secure financing or result in higher interest rates.
Your D&B score doesn’t just affect your relationship with lenders. Suppliers and vendors also use this score to determine whether they will extend credit to your business. A high score can result in better payment terms, such as longer repayment periods or lower interest rates.
A strong business credit score, including a high Dun & Bradstreet score, can give your business a competitive edge. It signals to potential partners, investors, and customers that your business is financially stable and capable of meeting its obligations.
With a solid D&B score, your business will be in a stronger position to negotiate favorable terms when borrowing or making purchases on credit. This can be especially helpful when negotiating large contracts or bulk purchases.
The most important factor in improving your D&B PAYDEX® score is your payment history. Ensure that you pay all bills on time. If possible, pay your invoices early to earn a perfect PAYDEX® score of 100. Even small suppliers and vendors can help improve your score if you maintain good relationships and pay promptly.
If you don’t already have credit accounts, consider opening trade credit accounts with suppliers or vendors who report to Dun & Bradstreet. Regularly using credit and paying on time helps build your business credit history, which can improve your score.
Try to keep your credit utilization ratio below 30%. High credit utilization suggests that your business may be overleveraged, which can negatively impact your D&B score. You can improve this by either paying down debt or requesting higher credit limits from your creditors.
Mistakes happen, and if you find discrepancies on your D&B credit report, it’s important to dispute them as soon as possible. Incorrect information, such as missed payments or incorrect business details, can damage your PAYDEX® score.
Staying on top of your business credit allows you to catch errors or potential issues early. Regular monitoring of your Dun & Bradstreet report also helps you track your progress toward improving your score.
Your Dun & Bradstreet score is a critical factor in determining your business’s financial health and access to capital. Whether you're seeking a business loan, vendor credit, or a new supplier, a high PAYDEX® score can make a significant difference. By maintaining a positive payment history, reducing debt, and regularly monitoring your credit report, you can improve your Dun & Bradstreet score and unlock better financing opportunities for your business.
Start by paying your bills on time, building your credit relationships, and monitoring your business credit regularly. The stronger your Dun & Bradstreet score, the more likely you’ll be able to secure the capital you need to grow and thrive.