Learn About Dun & Bradstreet Reports

Did You Want to Learn About Dun & Bradstreet Reports?

It’s time to learn about Dun & Bradstreet reports.

But let’s start with some definitions and background on business credit.

Business Credit

This is credit in a business’s name. It does not tie to the owner’s creditworthiness. Instead, business credit scores depend on how well a company can pay its bills. Hence consumer and business credit scores can vary dramatically.

Business Credit Benefits

Also, there are no demands for a personal guarantee. You can quickly get business credit regardless of personal credit quality. Also, there is no personal credit reporting of business accounts. Business credit utilization won’t affect your consumer FICO score. Plus the business owner isn’t personally liable for the debt the business incurs.

Being accepted for business credit is not automatic. Building business credit requires some work. Some of the steps are intuitive,and some of them are not.

Business Credit Reporting Agencies

There are three chief credit bureaus for business: Dun & Bradstreet, Experian, and Equifax.

In the business world Equifax and Experian are up there, but it’s Dun & Bradstreet which is the major player.

D&B has more than 10 times the records of the next closest reporting agency. See dnb.com/about-us/company.html.

What are in a Dun& Bradstreet Reports?

Do you have a copy of your Dun and Bradstreet report?

What is Dun and Bradstreet?

They are the oldest and largest credit reporting agency. You need a D-U-N-S number to start building business credit. Go to D&B’s website and look for your business, atdnb.com/duns-number. Can’t find it? Then get a free D-U-N-S number. You will always need a D-U-N-S number to start building business credit. Go here to get a D-U-N-S number and get into their system: dnb.com/duns-number/get-a-duns.html.

The main score is PAYDEX. But a business will not get a PAYDEX score, unless it has at least 3 trade lines reporting, and a D-U-N-S number. A business needs both to get a D&B score or report.

Dun & Bradstreet Reports

D&B offers database-generated reports. These help their clients decide if a business is a good credit risk. Companies use the reports to make informed business credit decisions and avoid bad debt.

Usually, when D&B does not have all of the information that they need, they say so in their reports. But missing data does not necessarily mean a company is a poor credit risk. Rather, the risk is unknown.

D&B’s database contains over 350 million companies around the world. It includes millions of active firms, and over 100 million companies which are out of business. But they keep these for historical purposes. This data goes into their reports.

D&B lists over a billion trade experiences. For as accurate a report as possible, give D&B your company’s current financial statements.

To see a sample Business Information Report, go to products.dandb.com/download/2019_BIR-Snapshot-Report.pdf

Predictive Models and Scoring

D&B takes historical information to try to predict future outcomes. This is to identify the risks inherent in a future decision. They take objective and statistically derived data, rather than subjective and intuitive judgments.

Dun & Bradstreet Reports: Sections

Here are the sections you could currently see in a typical Dun and Bradstreet business credit profile report.

Executive Summary

The report starts with basic company information, such as number of employees, year the business was started, net worth, and sales.

D&B Rating

This rating helps companies quickly assess a business’s size and composite credit appraisal. Dun & Bradstreet bases this rating on information in a company’s interim or fiscal balance sheet plus an overall evaluation of the firm’s creditworthiness. The scale goes from 5A to HH. Rating Classifications show company size based on worth or equity. D&B assigns such a rating only if a company has supplied a current financial statement.

The rating contains a Financial Strength Indicator. It is calculated using the Net Worth or Issued Capital of a company. Preference is to use Net Worth. D&B will show if a business is new or if they never got this information.

This section also adds a Composition Credit Appraisal. This number runs 1 through 4. Also, it reflects D&B’s overall rating of a business’s creditworthiness.

The scores mean:

1 – High
2 – Good
3 – Fair
4 – Limited

A D&B rating might look like 3A4.

Keep your business protected with our professional business credit monitoring.

D&B PAYDEX

This part shows two gauges. One is an up to 24 month PAYDEX. There’s also an up to 3 month PAYDEX. Hence you can see recent history and a firm’s performance over time.

Both gauges have the same scores. A 1 means greater than 120 days slow (in paying bills). A score of 50 means 30 days slow. One great score is 80, which means prompt. Also, 100 means anticipates. A 100 is the best PAYDEX score you can get.

PAYDEX Score

This is Dun & Bradstreet’s dollar-weighted numerical rating of how a company has paid the bills over the past year. D&B bases this score on trade experiences which various vendors report. The Score ranges from 1 to 100. Higher scores mean a better payment performance. PAYDEX scores reflect how well a company pays its bills.

Predictive Analytics

This next section shows likelihood of business failure. It also shows how frequently a business is late in paying its financial obligations. These are comparative analyses, the Financial Stress Class, and the Credit Score Class.

Financial Stress Class

Overall numbers range from 1 to 5. A 1 is businesses least likely to fail. Also, a 5 is firms most likely to fail. The Financial Stress Class measures likelihood of failure.

Financial Stress Class Score

These more granular scores range from 1,001 to 1,875. A score of 1,001 represents the highest chance of business failure. Also an 1,875 shows the lowest chance of business failure.

Credit Score Class

The Credit Score Class measures how often a company is late paying its bills. Overall numbers range from 1 to 5. A 1 is businesses least likely to be late. 5 is firms most likely to be late making payments. More granular scores run from 101 to 670. 670 is the highest risk.

Credit Limit Recommendation

It shows a spectrum of risk. Your risk category can be low, moderate, or high. Risk is assessed using D&B’s scoring methodology. It is one factor used to create the recommended limits.

D&B Viability Rating

This section contains:

Viability Score – to show risk
Portfolio Comparison – also a demonstration of risk
Data Depth Indicator – descriptive vs. predictive
Company Profile – this shows if financial data and other information was available

Credit Capacity Summary

This part repeats the D&B Rating above. It includes financial strength, the composite credit appraisal, and payment activity.

Business History and Business Registration

This section contains information on ownership. It also shows where a corporation is filed (i.e. which state). This includes the type of corporation, and the incorporation date.

Government Activity Summary and Operations Data

This section gives basic information on if a company works as a contractor for the government. It also shows the kind of business a company is in. It shows what the facilities are like, including general data on its location.

Industry Data and Family Tree

The section shows the business’s SIC and NAICS codes. It also shows where the branches and subsidiaries are. This list is just the first 25 branches, subsidiaries, divisions, and affiliates, both domestic and international. D&B also offers a Global Family Linkage Link to view the full listing.

Financial Statements

This section is for the financial statements D&B has on a business. It shows assets and liabilities, with specifics such as equipment, and even common stock offerings.

Indicators and Full Filings

This part shows public records, like judgments, liens, lawsuits, and UCC filings.

This part also breaks down where filings are venued, like the court or the county recorder of deeds office. It shows if judgments were satisfied (paid). It also shows which equipment is subject to UCC filings.

Commercial Credit Score

This part shows the Credit Score Class again. It also shows a comparison of the incidence of delinquent payments. It also includes key factors to help anyone reading the report interpret these findings. Also, it explains what the numbers mean.

Credit Score Percentile Norms Comparison

Here, D&B compares a company to others on the basis of region, industry, number of employees and time in business.

Financial Stress Score

This section shows a Financial Stress Class and a Financial Stress Score Percentile. The Financial Stress Class runs from 1-5, with 5 being the worst score.

Financial Stress Score Percentile

The Financial Stress Score Norms calculate an average score and percentile for similar firms. The norms benchmark where a business stands. This is in relation to its closest business peers.

It is a comparison to other businesses. The percentile contains a Financial Stress National Percentile. The Financial Stress National Percentile reflects the relative ranking of a company among all scorable companies in D&B’s file. It also contains a Financial Stress Score. The report shows the chance of failure with a particular score.

Keep your business protected with our professional business credit monitoring.

Financial Stress Score Percentile Comparison

The idea behind this score is to predict how likely it is a business will fail over the next 12 months. The Financial Stress Class shows a firm shares some of the same business and financial characteristics of other companies with this classification. It does not mean the firm will necessarily experience financial stress. The chance of failure shows the percentage of firms in a given percentile that discontinue operations with loss to creditors.

The average chance of failure comes from businesses in D&B’s database. It is provided for comparative purposes. The Financial Stress National Percentile reflects the relative ranking of a company among all scorable companies in D&B’s file. The Financial Stress Score offers a more precise measure of the level of risk than the Financial Stress Class and Percentile. It is meant for customers using a scorecard approach to determining overall business performance.

Advanced PAYDEX + CLR

This section repeats the 24 month and 3 month PAYDEX gauges. It also includes a repeat of the Credit Limit Recommendation. There is also a PAYDEX Yearly Trend. It shows the PAYDEX scores of a business compared to the Primary Industry from each of the last four quarters.

PAYDEX Yearly Trend

The PAYDEX Yearly Trend is a graph. It includes detailed payment history. with payment habits and a payment summary. This helps show if a business pays its bigger bills first or last.

Correcting Your Dun &Bradstreet Reports

Get your report from D&B at www.dnb.com/about-us/our-data.html. Update the relevant information if there are mistakes or the information is incomplete. At D&B, you can do this at: dnb.com/duns-number/view-update-company-credit-file.html.

Keep your business protected with our professional business credit monitoring.

Disputing Issues with Dun & Bradstreet Reports

None of the different business bureaus will change your scores without proof. They are also starting to accept more and more online disputes. Include proofs of payment with it. These are documents like receipts and also cancelled checks.

Fixing credit report errors also means you specifically spell out any charges you challenge. Make your dispute as crystal clear as possible. If you need to snail mail anything in, then use certified mail. This is so you will have proof that you sent in your dispute.

Be specific about the concerns with your report. D&B wants you to go through their Customer Service. You can also go through D&B Customer Service to add payment experiences. D&B’s Customer Service contact number can be found at dandb.com/glossary/paydex.

Monitoring Dun &Bradstreet Reports

Business credit reports are not always perfectly correct. All of the major CRAs are committed to accuracy. But you won’t know there are errors unless you monitor your business credit reports.

For D&B only, you can monitor your reports via CreditMonitor. It currently costs $39/month. See dnb.com/products/small-business/credit-monitor.html.

Monitoring Experian, Equifax, and Dun & Bradstreet Reports

You can monitor your business credit at D&B, Equifax, and Experian through Credit Suite, for considerable savings over what it would cost you at those different credit bureaus. And all in one place! Credit Suite offers monitoring through the Business Finance Suite (through Nav). See what credit issuers and lenders see. So you can directly improve your scores and get the business credit and funding you need. See suitelogin.com and also creditsuite.com/monitoring.

Dun & Bradstreet Reports: Takeaways

Dun & Bradstreet reports sport an impressive level of detail. The idea is to make it easier to decide if it’s a good idea to extend credit to another business. Also, your own company’s report can help show you where you can improve payment history. Also, you can see how your firm compares to similar businesses.

D&B is the largest business CRA. A D-U-N-S number is an absolute necessity for business credit building.

Monitoring all of your reports is expensive. But you can save 90% by monitoring your D&B, Experian, and Equifax scores through Credit Suite.

The post Learn About Dun & Bradstreet Reports appeared first on Credit Suite.

How to Read a Dun and Bradstreet Report

What’s in a Dun and Bradstreet Report? And What Do All Those Numbers Mean, Anyway?

Do you have a copy of your Dun and Bradstreet report?

What is Dun and Bradstreet?

They are the oldest and largest credit reporting agency. You need a D-U-N-S number to start building business credit. No D-U-N-S number? Then get one; they’re free. This number gets a business into their system.

The main score is PAYDEX. But a business will not get a PAYDEX score, unless it has at least 3 trade lines reporting, and a D-U-N-S number. A business must have both to get a D&B score or report.

Dun and Bradstreet Reports

D&B offers database-generated reports. These help their clients decide if a business is a good credit risk. Companies use the reports to make informed business credit decisions and avoid bad debt. Several factors enter into creating such a report.

In general when D&B does not have all of the information that they need, they will say so in their reports. But missing data does not necessarily mean a company is a poor credit risk. Instead, the risk is unknown.

D&B’s database contains over 350 million companies around the world. It includes millions of active firms, and over 100 million companies which are out of business. But these are kept for historical purposes. This data goes into their reports.

D&B constantly gathers data. They list over a billion trade experiences. It works to improve its analyses to assure the greatest degree of accuracy possible. To ensure as accurate a report as possible, give D&B your company’s current financial statements.

Predictive Models and Scoring

You can find a sample report here: dnb.com/content/dam/english/dnb-solutions/risk-management/sample_comprehensive_report.pdf .

Dun and Bradstreet Report Sections

Here are the sections you could currently see in a typical Dun and Bradstreet business credit profile report.

Executive Summary

The report starts with basic company information, such as number of employees, year the business was started, net worth, and sales.

D&B Rating

This section also adds a Composition Credit Appraisal. This number runs 1 through 4, and it reflects D&B’s overall rating of a business’s creditworthiness.

The scores mean:

1 – High
2 – Good
3 – Fair
4 – Limited

A D&B rating might look like 3A4.

Keep your business protected with our professional business credit monitoring.

D&B PAYDEX

This part shows two gauges: an up to 24 month PAYDEX, and an up to 3 month PAYDEX. Hence you can see recent history and a firm’s performance over time.

Both gauges have the same scores. A 1 means greater than 120 days slow (in paying bills). A score of 50 means 30 days slow. One great score is 80, which means prompt. And 100 means anticipates. A 100 is the best PAYDEX score you can get.

PAYDEX Score

Predictive Analytics

Keep your business protected with our professional business credit monitoring.

Financial Stress Class

Overall numbers range from 1 to 5. A 1 is businesses least likely to fail, and 5 is firms most likely to fail. The Financial Stress Class measures likelihood of failure.

Financial Stress Class Score

These more granular scores range from 1,001 to 1,875. A score of 1,001 represents the highest probability of business failure. A figure of 1,875 shows the lowest probability of business failure.

Credit Score Class

The Credit Score Class measures how often a company is delinquent in paying its bills. Overall numbers range from 1 to 5. A 1 is businesses least likely to be late. 5 is firms most likely to be late making payments. More granular scores run from 101 to 670. 670 is the highest risk.

Credit Limit Recommendation

It shows a spectrum of risk. Your risk category can be low, moderate, or high. Risk is assessed using D&B’s scoring methodology. It is one factor used to create the recommended limits.

D&B Viability Rating

This section contains:

Viability Score – to show risk
Portfolio Comparison – also a demonstration of risk
Data Depth Indicator – descriptive vs. predictive
Company Profile – this shows if financial data and other information was available

Credit Capacity Summary

This part repeats the D&B Rating above. It includes financial strength, the composite credit appraisal, and payment activity.

Business History and Business Registration

This section contains information on ownership. It also shows where a corporation is filed (i.e. which state). This includes the type of corporation, and the incorporation date.

Government Activity Summary and Operations Data

Industry Data and Family Tree

The section shows the business’s SIC and NAICS codes. It also shows where the branches and subsidiaries are. This list is just the first 25 branches, subsidiaries, divisions, and affiliates, both domestic and international. D&B offers a Global Family Linkage Link to view the full listing.

Financial Statements

This section is for the financial statements D&B has on a business. It shows assets and liabilities, with specifics such as equipment, and even common stock offerings.

Indicators and Full Filings

This part shows public records, like judgments, liens, lawsuits, and UCC filings.

Commercial Credit Score

This part shows the Credit Score Class again. It also shows a comparison of the incidence of delinquent payments. Also, it includes key factors to help anyone reading the report interpret these findings. It explains what the numbers mean.

Credit Score Percentile Norms Comparison

Here, D&B compares a company to others on the basis of region, industry, number of employees and time in business.

Financial Stress Score

This section shows a Financial Stress Class and a Financial Stress Score Percentile. The Financial Stress Class runs from 1-5, with 5 being the worst score.

Financial Stress Score Percentile

The Financial Stress Score Norms calculate an average score and percentile for similar firms. The norms benchmark where a business stands. This is in relation to its closest business peers.

It is a comparison to other businesses. The percentile contains a Financial Stress National Percentile. The Financial Stress National Percentile reflects the relative ranking of a company among all scorable companies in D&B’s file. It also contains a Financial Stress Score. The report indicates the probability of failure with a particular score.

Keep your business protected with our professional business credit monitoring.

Financial Stress Score Percentile Comparison

The idea behind this score is to predict how likely it is a business will fail over the next 12 months. The Financial Stress Class indicates that a firm shares some of the same business and financial characteristics of other companies with this classification. It does not mean the firm will necessarily experience financial stress. The probability of failure shows the percentage of firms in a given percentile that discontinue operations with loss to creditors.

The average probability of failure is based on businesses in D&B’s database. It is there for comparative purposes. The Financial Stress National Percentile reflects the relative ranking of a company among all scorable companies in D&B’s file. The Financial Stress Score offers a more precise measure of the level of risk than the Financial Stress Class and Percentile. It is meant for customers using a scorecard approach to determining overall business performance.

Advanced PAYDEX + CLR

PAYDEX Yearly Trend

The PAYDEX Yearly Trend is a graph. It includes detailed payment history. with payment habits and a payment summary. This helps show if a business pays its bigger bills first or last.

Dun and Bradstreet: Takeaways

A Dun & Bradstreet business credit report has an impressive level of detail. The idea is to make it easier to decide if it’s a good idea to extend credit to another business. And your own company’s report can help show you where you can improve your payment history, and how your firm compares to similar businesses.

The post How to Read a Dun and Bradstreet Report appeared first on Credit Suite.

Get Your Dun and Bradstreet Rating and More with D&B’s 5 Main Business Credit Scores

Do you want to know all about the Dun and Bradstreet Rating and all of their scores and reports? D&B is the oldest and largest credit reporting agency. But you will need a D-U-N-S number to start building business credit. What if you don’t have a D-U-N-S number? Then get one; they are free. Go to: dnb.com/duns-number/get-a-duns.html. So this number gets a business into their system.

What are D&B Reports All About?

To consider the scores, you need to look at D&B Reports. D&B offers database-generated reports. The business services giant produces such a report in order to help their clients decide whether a business is a good credit risk. Companies use the reports to make informed business credit decisions and avoid bad debt. So several factors enter into creating such a report.

In general when D&B does not have all of the data they need, they will indicate as much in their reports. But missing data does not necessarily mean a company is a poor credit risk. Instead, the risk is unknown.

This is true for the Dun and Bradstreet Rating and for any other D&B business credit score.

The main reason for a client using this kind of a report is to engage in credit risk monitoring of merchants, suppliers, and business partners. This helps companies make informed business credit determinations and steer clear of bad debt.

Dun & Bradstreet takes many factors into account in producing such a report. These include a predictor of payment delinquency; how financially stressed a company is compared to comparable businesses; an evaluation of supplier risk; credit limit recommendation; D&B rating; and PAYDEX score. So let’s consider all of these factors in turn.

Is D&B Data at All Accurate?

D&B Data is only as good as how complete it is. D&B constantly gathers data. So it works to improve its analyses to assure the greatest degree of accuracy possible. To ensure as accurate a report as possible, give D&B your company’s current financial statements.

What are Dun & Bradstreet Scores All About?

Now let’s look at Dun & Bradstreet Scores. D&B has five main scores. PAYDEX is maybe the best-known. The other four are the D&B Rating; Delinquency Predictor; Financial Stress Score; and the Supplier Evaluation Risk Rating. For a sample Business Information Report, go to products.dandb.com/download/2019_BIR-Snapshot-Report.pdf.

So the main score is PAYDEX. However, a business will not get a PAYDEX score, unless it has at least 3 trade lines reporting, and a D-U-N-S number. A business must have BOTH to get a D&B score or report.

What is the PAYDEX Score?

Let’s focus on the PAYDEX Score. This is Dun & Bradstreet’s dollar-weighted numerical rating of how a company has paid the bills over the past year. D&B bases this score on trade experiences reported by various vendors. The Score ranges from 1 to 100; higher scores mean a better payment performance. PAYDEX scores reflect how well a company pays its bills. Larger bills get more weight in the calculation.

What is the Dun and Bradstreet Rating?

Now let’s check out the Dun and Bradstreet Rating. Dun & Bradstreet bases the Dun and Bradstreet Rating on a company’s net worth based on financial statements, as well as the company’s overall condition.

So a Dun and Bradstreet Rating is meant to help businesses rapidly gauge a business’s size and composite credit appraisal. The Dun and Bradstreet Rating is based on information in a company’s interim or fiscal balance sheet, and also an overall evaluation of the firm’s creditworthiness.

If a company’s financial statements are not provided, the score is based on company size, industry, or other related factors. If a company does not provide info, D&B will base certain scores on other related information in their file.

A company will get a lower Dun and Bradstreet Rating if they do not provide any information. It is in every company’s best interests to provide as much info to Dun and Bradstreet as possible.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

What is the D&B Delinquency Predictor?

So let’s consider the Delinquency Predictor. The Delinquency Predictor runs from 1 to 100. Higher scores are better. Dun & Bradstreet uses predictive models to determine how likely a company is to be late with its payments. Predictive scoring is a method of using historical information in order to try to predict future outcomes. It entails identifying the risks inherent in a future decision. It does this by examining the relationship between historical information and the future event.

This represents an objective and statistically derived counterpart to subjective and intuitive assessments. Such scoring allows a business to rank and order accounts based upon the probability of an event taking place, such as delinquent payments.

That being said, note that predictive scoring only represents a statistical probability. So it is not a guarantee. The scoring system ranks and orders accounts based on the probability of late payments. However, a new company has no historical information, by definition.

The Delinquency Predictor looks at the proportion of slow payments in recent months; Proportion of past due balances to total amount owing; the higher risk industry based on delinquency rates for this industry; any increase in proportion of delinquent payments in recent payment experiences; and any evidence of open suits.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

What is the Dun & Bradstreet Financial Stress Percentile?

Now let’s tackle the Financial Stress Percentile. The percentile runs from 1 to 100. 1 percentile is most likely to fail. The 100 percentile is least likely to fail. It is a comparison to other businesses.

The Financial Stress Percentile compares the company in question to other businesses in the same location, business sector, number of employees, or number of years in the business. Financial Stress Score Norms show an average score and percentile for all firms with similar demographic characteristics. These Norms can be used in order to benchmark where this particular business stands in relation to the norm for its peer group.

It is based on a much higher raw score, the Financial Stress Score. The Financial Stress Score runs from 1,001 to 1,875. A score of 1,001 represents the highest probability of business failure. So a figure of 1 shows the lowest probability of business failure.

How Does the Financial Stress Score Relate to the Financial Stress Percentile?

The Financial Stress Score is based on a low proportion of satisfactory payment experiences to total payment experiences, a high proportion of past due balances to total amount owing, any UCC Filings reported, and a high number of enquiries to D&B over last 12 months. So this score compares a company to similar businesses in the D&B database.

Dun & Bradstreet produces Financial Stress Scores to forecast the chance of business failure over the upcoming twelve months.

D&B defines business failure in several ways. One is as a business which gets legal relief from its creditors. Another is a firm which discontinues its business operations without paying off all of its creditors in full. Yet another is a business which voluntarily withdraws from its business operations thereby leaving unpaid obligations

Another way is a company which enters into receivership or reorganization. Or it can be a company which makes some kind of arrangement for the benefit of its creditors. And all of this is based on the information found inside D&B’s commercial database.

If your company has a lot of lawsuits and liens against it, those will negatively impact your financial stress score.

What is the Dun and Bradstreet Supplier Evaluation Risk Rating?

How about the Supplier Evaluation Risk (SER) Rating? So this is a scale of 1 to 9. 1 means a company is least likely to fail to pay its own suppliers. Whereas 9 is the opposite, showing highest likelihood.

The Supplier Evaluation Risk Rating forecasts how probable it is that a company will get legal relief from its creditors. Or it can show the chance a business will discontinue its operations without paying creditors in full over next twelve months. The SER rating comes from D&B’s Financial Stress Score. So the Financial Stress Score percentile serves as the basis for the SER Rating.

Factors affecting a Supplier Evaluation Risk Rating are a negative net worth, and the proportion of slow payment experiences to total number of payment experiences reported. So the factors also include if a business belongs to an industry with above average risk of ceasing operations or becoming inactive.

So it is not exactly the same as the Dun and Bradstreet Rating.

What is the D&B Maximum Credit Recommendation?

Consider the Maximum Credit Recommendation. So it includes recommended dollar guidelines. D&B performs an overall assessment of a business for the next 12 months. They also check the predicted risk of business discontinuation. Further, they look at the predicted risk of severely delinquent payments.

D&B bases its dollar guideline amounts on a historical analysis of overall business risk. A recommended limit is based on the probability of severe delinquency. But this recommendation is no guarantee that a business can cover the recommended amount.

More Information about D&B Business Information Reports

What else is in D&B Business Information Reports? In addition to the above scores, a D&B Business Information Report contains trade payments (summary and by industry). So it also has trade line specifics with dollar amounts and terms, and legal events. It also has company events (mainly concerning ownership and management). So it also has a company family tree showing ownership specifics.

A Business Information Report also contains a Risk Assessment summary. So this summary shows the Maximum credit recommendation; PAYDEX; Delinquency Predictor percentile; Financial Stress percentile; and the Supplier Evaluation risk.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Dun and Bradstreet Rating: Takeaways

Dun & Bradstreet collects objective data points on businesses and creates Business Information Reports from them. These reports outline five basic scores. So some of these are predictive scores. The more information D&B has, the more comprehensive the report is.

Finally, a Dun and Bradstreet Rating is only as good the information in its report.

Dun & Bradstreet’s database includes over millions of firms spanning the globe. So this includes millions of active companies and millions more companies which are out of business but kept for historical reasons.

D&B constantly gathers data and works to improve its analyses to ensure the greatest degree of accuracy possible. To ensure as accurate a report as possible, it quite literally pays to provide D & B with your business’s current financial statements. In that way, you will have a far more accurate Dun and Bradstreet Rating sand D & B report.

Because an accurate D&B report means you are far more likely to get business funding.

The post Get Your Dun and Bradstreet Rating and More with D&B’s 5 Main Business Credit Scores appeared first on Credit Suite.

How to Build PAYDEX Score Fast: And Other Dun & Bradstreet Reports You Need to Know About

If you know anything about business credit is it probably about the Dun & Bradstreet PAYDEX score. D&B is the largest and most commonly used business credit reporting agency. The PAYDEX score is the score from Dun & Bradstreet that lenders use most often. This is likely because it is the most comparable to the consumer FICO, so they feel like they can easily understand the information it is telling them. Follow these tips to build PAYDEX score fast.<

Build PAYDEX Score Fast, but Don’t Forget the Other D&B Reports

Your Dun & Bradstreet report is among the first things a lender will look at when determining whether to do business with you. They offer database-generated reports to their clients to help them decide if you, a potential vendor, supplier, or business partner, are a good credit risk.

A company will rely on the D & B Report about your firm to make informed business credit determinations and avoid bad debt. Dun & Bradstreet takes several factors into account in creating such a report. Let’s look at all of these factors in turn, starting with the PAYDEX. Afterall, you cannot understand how to build PAYDEX score fast without understanding what exactly the PAYDEX is.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

PAYDEX Score

The PAYDEX Score is Dun & Bradstreet’s score that tells the lender how well your business has paid the bills over the past year. D & B bases this score on trade experiences documented by vendors. It ranges from 1 to 100. The higher the score, the lower the perceived risk.

We will discuss this more in depth later, but the quick answer to how to build PAYDEX score fast is to pay your business obligations on-time and consistently. The trick is getting those payments reported to D&B and not personal credit reporting agencies.

In addition to the PAYDEX, D&B uses the following.

Delinquency Predictor

To estimate how likely a company is to be late in paying debts, Dun & Bradstreet uses predictive models. They use predictive scoring, which takes historical data to try to predict future results. They do this by figuring out the potential risk of a future decision, then they compare the historical information to a future event. Thus, predictive scoring only represents a statistical probability, and not a guarantee.

Financial Stress Percentile

The Financial Stress Percentile compares companies in categories such as region, industry, number of employees, or number of years in the business. Financial Stress Score Norms determine an average score and percentile for similar firms.

Financial Stress Score

Dun & Bradstreet generates Financial Stress Scores to predict how likely it is a business will fail over the next twelve months. These scores range between from 1,001 to 1,875. A score of 1,001 represents the highest probability while a figure of 1,875 shows the lowest probability of business failure.

Financial Stress Risk Class

This is a rating from D&B that places business in classes from 1 to 5. Class 1 includes businesses least likely to fail, while class 5 includes those firms most likely to fail. Therefore, a D & B customer can rapidly divvy their new and existing accounts by risk and then determine how to proceed. If your business is shown as being Discontinued at This Location; Higher Risk; or Open Bankruptcy, you are going to automatically get a 0 score.

Financial Stress Score Percentile

This score has a 1-100 ranking where a 1 percentile is most likely to fail and a 100 percentile is least likely to fail. If D&B identifies a company as financially stressed, that indicates it has stopped operations following assignment of bankruptcy, voluntarily withdrawn from business operation with unpaid obligations, or closed up shop with a loss to creditors. It could also mean a company is in receivership, reorganization, or has made some sort of an arrangement for the benefit of creditors.

Supplier Evaluation Risk Rating

The Supplier Evaluation Risk Rating (also called a SER Rating) predicts how likely it is a company will get legal relief from creditors or end operations without paying creditors in full over the next twelve months. Once Dun & Bradstreet calculates the Financial Stress Score percentile for your company, they apply a second set of rules to calculate the SER Rating, on a scale of 1 – 9. A 1 means your company is least likely to fail to pay suppliers. A 9 is the opposite, showing the highest likelihood.

Credit Limit Recommendation

A D&B Credit Limit Recommendation includes two recommended guidelines:

A conservative limit, recommending a dollar benchmark if a company’s policy is to extend less credit to minimize risk and
An aggressive limit, suggesting a benchmark if a firm’s policy is to extend more credit with potentially more risk.

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D & B bases these dollar guideline levels on a historical evaluation of the credit demand for similar businesses, with respect to employee size and industry. Dun & Bradstreet assesses how likely a business is to continue to pay your according to the agreed-upon terms, and how likely it is to experience financial stress in the next twelve months.

D & B Rating

A D&B Rating helps lenders swiftly assess a business’s size and credit potential. Dun & Bradstreet bases this rating on details in your company’s balance sheet, plus an overall evaluation of the firm’s creditworthiness. The scale goes from 5A to HH.

Composite Credit Appraisal

This number, between 1 through 4, makes up the second half of your firm’s rating. It reflects Dun & Bradstreet’s overall rating of your business’s creditworthiness. They analyze company payments, financial information, public records, business age, and other factors.

If your company does not supply current financial information, you cannot get a Composite Credit Appraisal rating of better than a 2. The 1R and 2R rating categories show company size only based on the total number of employees. Consequently, these ratings are assigned only if your company’s file does not contain a current financial statement. Employee Range (ER) Ratings apply to specific lines of business not lending themselves to categorization under the D & B Rating system. These kinds of businesses receive an Employee Range symbol based upon the number of employees and nothing else.

In general, when Dun & Bradstreet does not have all of the information they need, they will show that in their reports. However, omitted information does not necessarily mean your firm is a poor credit risk.

D & B Data

Finally, any report is only as good as the data it originates from. Dun & Bradstreet’s database includes over 250 million companies around the world. It includes around 120 million active companies and about 130 million companies which are out of business but kept for historical reasons. D & B continuously gathers data and works to improve its systems to ensure the greatest degree of accuracy feasible. Businesses should provide D&B with a complete financial statement to ensure as accurate a report as possible.

Build PAYDEX Score Fast: Practical Tips

While it is tremendously helpful to understand all the different reports Dun & Bradstreet can generate for your business, when it comes to getting funding you need to know how to build PAYDEX score fast. Keep in mind however, fast is relative. Will it take years like it does to build a personal credit score? No, it won’t. Will it happen overnight? That’s a resounding no as well.

It also will not happen on its own. You cannot passively do business and expect to build PAYDEX score fast. You have to take intentional steps toward building your business credit score. It’s a process, and it starts with how your business is set up. Some of these steps may already be done, as often they happen in the course of opening a business. Some of them however, may not have seemed necessary at the time. When it comes to building PAYDEXs however, they are absolutely necessary.

Regardless of where you are in the life of your business, it is never too late to take the steps necessary to build PAYDEX score fast.

Build PAYDEX Score Fast: Set Up Your Business as a Fundable Entity

Many times, in the early days of a business, business owners find it easy to run the business as an extension of themselves. They operate as a sole proprietorship, using their own address and phone number as contact information. There seems to be no reason for a separate bank account, and an SSN works just find when asked for.

To build PAYDEX score fast however, this will not work. Your business needs to be separated from yourself as the owner. It needs to appear to lenders to have fundability on its own merits, not yours.

Steps to Set Up Your Business as a Fundable Entity

Separate Contact Information

Contact information is an identifying factor. If you apply for credit with your personal address and phone number, that application is going to pick up you’re your personal credit report. Your business needs its own phone number and address. If you don’t have an actual location or separate phone line, you can still accomplish this. There are a number of options for phone numbers that will ring to your current line, and virtual offices offer a physical mailing address along with many other services.

Get an EIN to Use in Place of an SSN

This is easy to do and completely free. It can be done online at IRS.gov in a matter of minutes. The point is to use this number, instead of your social security number, to apply for credit in your business name. This way, the account will report your information to the business CRAs, including Dun & Bradstreet.

Incorporate Your Business

Whether you choose to incorporate as a corporation, S-corp, or LLC does not matter when it comes to fundability. Make that decision based on other factors, like how much liability protection you need and your budget. You do need to choose one though. Operating as a sole proprietorship will not work well if when building business credit.

Get a D-U-N-S Number

If your follow every single step and do not do this one, you will never build PAYDEX score fast. In fact, you cannot have a PAYDEX score at all if you do not have this number. It’s free also, and easy to get on the D&B website. However, they will try to sell you a ton of other services that you really do not need. Just get the number and move on.

Open a Separate Business Bank Account

Not only will this help you keep your business expenses separated from your personal expenses for tax purposes, but it will also help you when you apply for credit in your business name. Some vendors and lenders like to see a business bank account with a minimum average balance before extending credit.

Build PAYDEX Score Fast: Vendor Credit

Separating your business from yourself is not the whole story. That’s really just laying the foundation that you can build on. You have to stack the blocks, and they have to be stacked in order. You can’t just follow all these steps and then go apply for regular business credit cards with your business credit. It still doesn’t exist.

The key to building PAYDEX score fast is the vendor credit tier. This is how your will initially build your PAYDEX score so that you can apply for credit from those lenders that will want to see a strong score.

The vendor credit tier includes starter vendors that will issue invoices with net 30 terms without even checking your credit. Set up your account in your business name, and they will report your on-time payments to the business credit reporting agencies. It is important to note that not all of them report to all the CRAs, so be sure you find those that report to Dun & Bradstreet if you want to build PAYDEX score fast. The more of these vendors your have reporting, the faster your score will grow. Remember though, you have to pay on time.

Build PAYDEX Score Fast: Other Ways to Get Accounts Reporting

At the same time, you can talk to vendors you already do business with. In light of the fact that you already have a relationship with them, they may be willing to offer net terms without checking credit and report payments. Check with utilities too. They will sometimes report payments to D&B if you ask. The more accounts you get reporting, the faster your score will build. With each on time payment your score will only get stronger.

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It is Possible to Build PAYDEX Score Fast with the Vendor Credit Tier

This process is not only important for building PAYDEX score fast, but really for building PAYDEX, or any business credit at all. If you do not separate your business from yourself, any credit accounts you get approval for will report payments to your personal credit. That doesn’t affect your business credit score. If you follow these steps however, you will be able to build your business credit score on each report, including your PAYDEX report, faster.

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All the World’s a Stage: Meet Dun and Bradstreet and the Business Credit Characters

Everything you Need to Know about Dun and Bradstreet and the Other Characters in the Show

All the world’s a stage they say, and when it comes to your business, business credit is the star of the show. It can make you laugh, cry, or carry you on wings that soar. It can truly be the foundation on which your business is built, or it can be the very thing that tears it down. Dun and Bradstreet has carried the title of lead player in a credit reporting agency role for years, but the supporting roles played by both Experian and Equifax bear mentioning as well.

Before we jump into the life and purpose of each, it can help to understand a little more about business credit. Why business credit? What makes it so special? Who needs it? Why does it play such a vital role in the show?

Why Business Credit?

There are a number of reasons why it is essential to actively attempt to build credit.

Shield Your Personal Credit Report

It is important to organization success that you develop business credit. Without a business credit score, your capability to fund your business rests entirely on the qualities of your individual credit score. That’s not a big deal if you have great personal credit.

However, business financing can impact your personal credit scores as well. If you finance your business on the merits of your personal credit, you will likely find your balances hover near your limits. On personal cards the limits are not as high as most business cards allow.

This has a negative effect on your credit report even if you are making your payments on time. If your business has its very own credit report, it’s not a problem. Limitations are higher, so you have a lot more credit to deal with. Regardless, it doesn’t impact your personal credit score.

When you have solid business credit, you have accessibility to funds to do the things you need to do throughout the normal course of company business. Not only that, but you can do what you need to do without worrying about depleting cash reserves.

In short, business credit opens the door to higher limits, lower interest rates, and it protects your personal finances from being affected by your business transactions.

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Business Credit vs. Personal Credit: A Character Study

While their character purposes are similar, they are not the same. They play roles that are the same, but in very different circumstances. Think of the difference in a parent and a boss. Both can tell you what to do. Both can teach you, guide you, and help you thrive where you are. They are not the same however. A parent leads and guides in your personal life, while a boss does so at work. A boss can fire you from your job, but your parents cannot. Your parents can kick you out of your house, but you boss cannot.

Personal credit and business credit kind of work the same way. Your personal score doesn’t have to affect your business, and your business credit doesn’t affect your personal finances, if you set things up properly. There are other differences as well.

Key Differences Between Personal Credit Reports and Business Credit Reports:

Personal FICO scores range from 300 to 850
Business credit scores usually range from 0 to 100.
FICO algorithms are commonly used by consumer credit bureaus to generate a credit score.
Business credit scores do not follow industry standard algorithms, meaning they can vary greatly between credit reporting agencies.
Business credit usually include only accounts that are in your company’s name. Your personal accounts are on your personal credit report.

You can get a free copy of your personal credit report from the three major consumer credit reporting agencies each year. This includes Experian, Equifax, and TransUnion. There are also several free options for getting a glimpse at your credit scores at any given time.
Business credit is quite different when it comes to accessibility. You have to pay to see your company’s credit report and to find out the score at all three major business credit reporting agencies, including Dun and Bradstreet, Experian, and Equifax.
Not just anyone can see your personal credit report, but business credit reports are public. Anyone that wants to pay can see your business credit.

Dun and Bradstreet: The Star of the Show

So, who is the star of the business credit report show? It’s a unanimous vote for Dun and Bradstreet. They are the oldest and most commonly used business credit reporting agency. They offer way more than just a single business credit score. There are multiple reporting options that lenders can choose from to assess the credit worthiness of a specific business. Following is a breakdown of what they offer, with an explanation of what it all means and why they are a credit reporting super star.

Credit Reporting at Dun and Bradstreet: What Does Dun and Bradstreet Do?

The quick answer is they provide lenders with business credit reports to help them make lending decisions.

There are six different Dun and Bradstreet reporting options, all measuring different areas of credit worthiness. The most commonly used and simplest to understand Dun and Bradstreet credit report is the PAYDEX. Generally speaking, this is the Dun and Bradstreet credit score most like the consumer FICO score. It measures the speed of payment and ranges from 1 to 100. A 70 or higher is “good.” For example, a score of 100 means that the company makes payments in advance, and a score of 1 indicates that they pay 120 days late, or more.

Without Further Ado: The Many Faces of the Dun and Bradstreet Credit Report

In addition to the PAYDEX, there are many other options for a business credit report. Dun and Bradstreet offers several different types.

Dun and Bradstreet Delinquency Predictor Score

The delinquency predictor score measures the likelihood the company will not pay, will be late paying, or will fall into bankruptcy. The scale is 1 to 5, and a 2 is considered good.

Financial Stress Score

The financial stress score is a measurement of the pressure on a company’s balance sheet. It indicates the likelihood of a shutdown within a year. It measures with a minimum of 5 and a maximum of 1, with a score of 2 being a good thing.

Supplier Evaluation Risk Rating

This is a rating that ranks the odds of a company surviving 12 months. The minimum score is a 9 and the maximum is 1. A score of 5 is good.

Credit Limit Recommendation

The credit limit recommendation shows a business’s borrowing capacity. It is a dollar amount recommendation for how much debt a company can handle. Typically it is used by creditors to determine how much credit to extend.

D&B Credit Rating

This is an estimation of overall business risk on a scale of 4 to 1. A two is considered good. The rating is given in conjunction with letters, the combination of which indicate a company’s net worth.

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Even if there isn’t enough information on a business to assign a regular rating, Dun and Bradstreet will assign what they call a Credit Appraisal Score. This is based on number of employees. Another option is an alternative rating based on what data is actually available.

It is also important to note that the letter portion of this rating cannot be assigned as good or bad, as net worth is not necessarily an indicator of how stable a business is.

What Goes into a Dun and Bradstreet Credit Rating?

The various scores and ratings are based on data that they receive from a number of places. The first source is the business itself, but they also tap into public records. A business must submit a financial statement to D&B before they can have a full rating. In the absence of that, a limited rating will be issued based on number of employees. For example, the rating would be 1R if the business has 10 employees or more, and 2R if they have less than 2 employees.

A composite credit appraisal may also be available in the absence of a financial statement. A business is only eligible for a rating up to a 2 in this case however. They are ineligible for a 1 rating without a financial statement.

In addition to self-reporting financial statements, you can self-report trade references to D&B, which makes it easier to build business credit faster. You will need a DUNS number to have a credit report with them at all, but that is free and easy to get on their website.

Dun and Bradstreet and the Commercial Credit Score

The commercial credit score is the term used to describe the actual business credit score. It has three separate parts, and each predicts how likely the business is to default on bills or become delinquent. Following are the three parts and the scales by which they are ranked.

Commercial credit score

Measured on a scale of 101 to 670, it predicts the probability of a company becoming delinquent. A score of 101 is most probable, so that’s bad. A score of around 500 is good.

Commercial credit percentile

This is measured on a scale of 0 to 100. It measures the probability of delinquency as well, but against other companies in the Dun and Bradstreet system. A score of 1 is the highest probability compared to other businesses in the system, and most say a score of 80 is good.

Commercial credit class

This is a method of dividing businesses into classes based on the probability of delinquency. Companies in class 1 are the least likely to be delinquent. If you are in class 2, that’s good.

Who Are the Other Characters?

In this great show of business credit reporting agencies, it can be easy to forget there are other players when Dun & Bradstreet seems to shine so bright. There are, however, other agencies that offer business credit reports.

Equifax

They collect their information in ways not unlike Dun and Bradstreet, including: information from public records, financial data from the business, and payment history from creditors. In addition, they factor information about credit utilization, or how much credit a business is currently using versus how much they have available, into their calculation.

They then use the information collected to generate various scores. These scores include the business credit risk score and the business failure score. The business credit risk score measures how likely it is that a business will become 90 days or more delinquent on bills over the next 12 months. It ranges from 101 to 992. The business failure score ranges from 1,000 to 1610, and it predicts how likely it is that the business will file for bankruptcy over the next year. The lower the score, the higher the risk.

Another score they offer is the business payment index. This is their version of the D&B PAYDEX, and it even runs on the same scale, 0 to 100. It indicates payment history over the past year. Different from the PAYDEX however, you have to reach a score of 90 or higher for it to be a “good” score.

Equifax also offers business identity reports that serve as confirmation that a company actually exists. It also verifies details such as the company’s tax ID, number of employees, and yearly sales.

Equifax does not allow business owners to request a report on their company. They decide themselves when to start a credit file on a specific company.

Experian

Experian’s credit ranking, Intelliscore, uses more than 800 variables to predict a company’s risk of defaulting or becoming delinquent. A 76 or higher is considered good with Intelliscore. That indicates a low risk of late payments or default. A score from 51 to 75 indicates a low to medium risk and 26 to 50 indicates medium risk. From 25 down 1 is medium high to high risk.

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Intelliscore is considered a blended score of both the business and business owner’s information. It offers insights into a business’s public record findings, collections, payment trends, and overall business background. A major difference between Experian and the other two characters is that they do not ask businesses to self-report at all. Rather, they collect all the information themselves. Since it includes personal information, you do have to give permission for a lender to view this report.

Specifically, the Experian credit ranking gives insights into a company’s payment trends, public record filings, collections, and general business background. The result is a blended score calculated using both the business and business owner’s information.

The Experian Database and Credit Report Generation

Experian’s database has information on over 27 million businesses. Reports are generated with information from the database, which houses information on bankruptcy filings, payment history, collections, banking, insurance, and leases.

There has to be a minimum amount of information in the database about a business before Experian will generate a score for it. There must be at least one tradeline in the system, so you should definitely do business with a company that will report to Experian if you want to build business credit.

Applause or Rotten Vegetables: Which Credit Reporting Agency Really Matters?

All the players are important for this reason. You do not know, and cannot choose, which one your lender will use to base their decision upon. This means it is important to build strong business credit with each one. While a lot of this is out of your control, you can choose which starter vendors you work with. Since not all starter vendors report to all credit reporting agencies, you need to make sure you do business with a variety that report to each one. Then you can be on your way to building strong business credit.

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