Key takeaways

  • The business credit rating agency Dun and Bradstreet assigns scores to businesses that signal their creditworthiness and financial well-being to future creditors, lenders and vendors.
  • Your business credit rating is based on such inputs as your business’s track record of on-time payments, its business structure and the likelihood of it defaulting on loans and credit.
  • It's a good idea for businesses to keep track of their rating and take steps to improve it for the strongest terms and rates on future business.

If you’re a business owner, it’s likely that when you applied for financing or leasing a property, the bank or leasing agency checked your business’s Dun and Bradstreet (D&B) rating. Dun and Bradstreet is a company that gives potential investors or financiers insight into a business by providing a score of its creditworthiness.

If you own a business, you should keep an eye on your D&B rating to ensure your score reflects good standing, as — like with personal credit scores — a low rating can affect future business deals. Here’s what to know about this important business credit rating.

What is the D&B rating?

A Dun and Bradstreet credit rating is a score that indicates the financial stability and creditworthiness of your business.

Dun and Bradstreet — better known as D&B — is a credit reporting bureau focused on the commercial sector. It compiles a list of information on businesses to help financial institutions decide whether to extend credit, financial support or even supplies to a business, whether it’s for investment purposes, business loans and small-business credit cards, long-term lease agreements or even financing equipment.

A D&B rating is broken down into two segments in an attempt to provide accurate and fair information on a company’s financial strength and composite credit appraisal:

  • Financial strength reflects a company’s size based on information the business provides to D&B. Scores range from 5A for companies with more than $50 million in net worth to HH for companies with a net worth of under $5,000.
  • Risk indicator is a composite credit appraisal that shows whether a company’s creditworthiness on a rating scale of 1 to 4, where 1 is the highest score. This indicator factors in a business’s history of making trade payments, years in business, number of employees and legal structure, as well as negative information about the firm.

How D&B generates a business rating

Dun and Bradstreet generates credit ratings and scores based on information provided by your business as well as lenders and suppliers, which report your payment information to Dun and Bradstreet. D&B also looks at public records related to your business, such as regulatory requirements or business tax reports.

If you aren’t able to submit a financial statement to Dun and Bradstreet, D&B will calculate a limited rating without it — but providing accurate and comprehensive information about your company is the only way to receive a coveted 1 score. That information is used to calculate the main types of D&B credit ratings assessed by potential business investors, lenders and vendors.

Types of D&B credit ratings

D&B reporting includes various credit ratings that determines a business’s overall creditworthiness to future creditors and vendors:

  • PAYDEX Score. This score of 1 to 100 measures your company’s ability to pay your debts using information from the previous two years. To be eligible for the best loans and strong credit ratings, your business should shoot for a score within the 80 to 100 range. Businesses within the 0 to 49 range are considered high risk, signaling to future creditors, investors or vendors that you might have trouble repaying your business debts.
  • D&B Delinquency Predictor Score (DPS) and D&B Failure Score. These ratings predict the likelihood of your business defaulting on payments or experiencing financial stress in the next 12 months. Both ratings are based on a scale of 1 to 5, where 1 is the lowest likelihood and 5 is the highest.
  • D&B Maximum Credit Recommendation. This report is useful for financial institutions or banks wishing to extend credit to a business, such as extending terms for stock purchases. It calculates a recommended credit limit a business can extend to a new business customer.
  • D&B Supplier Evaluation Risk (SER) Report. Businesses that rely on suppliers for stock want to know their supply is secure and can continue without interruptions. This report digs into the supply chain to help determine whether a supplier is at risk of going out of business within the next 12 months. It uses a rating scale of 1 to 9, where 1 is the lowest risk.

What impacts my business D&B rating?

Many factors can affect your D&B rating, including:

  • Changes in your business’s finances or payments. Positive changes could be an improvement in how your business is maintaining payments, while negative changes are a history of late or skipped payments.
  • Potential legislation. The documentation you provide to assess your business’s standing might reveal potential legal issues, which can affect your business’s rating.
  • Not providing documentation at all. While it’s not necessary to provide documentation, your business can only reach a maximum rating of 2 without it.
  • Maxing out your credit. Maintaining regular payments on your loan products is not enough. It’s also important to keep your borrowing within acceptable limits to avoid maxing out your lines of credit.

How to obtain D&B credit scores

The first step on how to get a Dun and Bradstreet rating is to create a D-U-N-S number — short for Data Universal Numbering System number — which you can request online. This number allow you to build your score, and sometimes, this number has already been created for you based on searches by your suppliers, clients or lenders.

Once the D-U-N-S number is created, you can establish your Business Credit File and sign up for CreditSignal, which alerts you when there are changes to your score. Full reports are behind a paywall, which requires you to sign up for one of the packages.

How to improve my business’s D&B rating

  • It’s important for you to know what credit bureaus and similar agencies are saying about your business. The fastest way to get a breakdown of your standing is by reading your D&B credit reports. And report any errors to D&B immediately.
  • Make sure to prioritize on-time payments for your loans, credit cards and other financing. If you’ve missed payments before, work to get on a more regular and reliable payment schedule, and stay within your maximum lines of credit. Credit lines that are constantly maxed out can bring down your credit rating. And if you have no credit, consider applying for a small loan to start building your business credit history.
  • A D&B rating doesn’t require documentation for the rating to generate, but D&B will only score your business a maximum composite credit appraisal of 2 without it. To get that rating to 1, you must provide more than what D&B is able to find in public records.

The bottom line

Dun and Bradstreet has a long history as a credit rating bureau that focuses solely on businesses. A D&B rating is important for both small and large businesses in that it can directly affect the terms you get on future financing and business contracts, affecting your prospects for growth and progress. Keep an eye on your score and take steps to maintain or improve to stay on the best terms for your business dealings.