Your Dun & Bradstreet Rating and Its Importance to Your Business

One of the most popular credit reports for businesses is the Dun & Bradstreet report. Dun and Bradstreet (D&B) is a credit reporting agency that collections private and public information to produce a credit profile. Dun & Bradstreet provides PAYDEX business credit scores as well. Your D&B business credit report shows your company information including operational data and public filings such as liens and bankruptcies. Lenders look at this information to determine how creditworthy you are. Keep reading to find out more about your D&B rating and how it affects your business.

What Is a Dun & Bradstreet Rating?

The Dun & Bradstreet Rating provides an overview of the financial standing and creditworthiness of your business. There are two parts to the D&B rating: a rating classification and the composite credit appraisal.

Rating classification: this uses a combination of numbers and letters to rank the company’s size based on equity or net worth. This can range from HH (less than $4,999) all the way up to 5A (over $50 million), or 1R to 2R when the rating is based on the size of the company.  It is only assigned if you have supplied D&B with a current financial statement.

Composite credit appraisal: this measures how credit worth your business is on a scale of 1 to 4. The lower the number is the better. This score is based on the payment history of the company, years in business, public records, the number of employees, and financial information.

These two measures help determine your business’s creditworthiness based on company size and financial resources.

How the Dun & Bradstreet Ratings are Generated

D&B produces its ratings, scores, and reports based on the payment histories reported by creditors and the information a company submits to the firm. They use statistical analysis, industry standards comparisons, demographics, and other data to make projections about the business performance.

Why Is a Dun & Bradstreet Rating Important?

D&B Ratings matter because other companies may be looking at it to see decide if they should do business with your company or not. The information in the credit reports can make the difference between closing a deal or not.

The D&B report is best for the following situations:

  • Businesses that want to build credit: great for companies that have little to no business credit.
  • Businesses that need financing: D&B report shows payment history and credit scores to help lenders determine a company’s creditworthiness.
  • Companies negotiating with vendors: owners can show their good payment history with other vendors and negotiate terms.
  • Creditors: they can pull D&B reports on potential borrowers before approving credit.

Advantages & Disadvantages of the Dun & Bradstreet Report

Like with other credit bureaus, there are both advantages and disadvantages to the D&B Report.

Advantages of the D&B Report

  • The report is popular among creditors and lenders. Creditors use this profile and your score to determine your creditworthiness.
  • You can boost the credit score of your business with D&B.
  • You can add as much information as possible to the report to ensure that the correct information is listed.

Disadvantages of the D&B Report

  • It can be costly to access your credit report. To get just one report can range from $60 to $90, depending on the option you choose.
  • You must apply for a D-U-N-S Number to establish a D&B credit report.
  • Your D&B report can contain errors since most credit bureaus collect private and public information using the name and address of your business.

Reasons Why Your Dun & Bradstreet Rating Changes

There are a few reasons why your rating could change or fluctuate such as:

  • Increased borrowing
  • Late payments to suppliers
  • Revised financial information about your company
  • Lawsuit concerns

Stay on top of your credit file and if you see any inaccuracies report them immediately. Also, work with lenders that report to the credit bureaus and always pay your invoices on time.

The Bottom Line

The Dun & Bradstreet report uses information collected from numerous sources to create a business credit report. The report will benefit owners who want to establish business credit and get approved for loans.