Your company's D&B Rating® is one of the driving forces that determines your ability to achieve business credit. It is a rating generated for your company by Dun & Bradstreet, and effectively defines your company's credibility, strength, size, and validity — all in just a few simple letters and numbers.
Contrary to what most frustrated business owners believe, there is no mystery formula and no secret algorithm that establishes this score. There is no personal influence that can be weighed in from any D&B employee. Amazingly enough, you can be the deciding vote on what your D&B rating will be. But before you do anything, you need to understand the score and what you can do to influence it.
Your D&B Rating is based upon information gathered about your business from a variety of trusted sources. These may include:
State agencies filtering raw data into D&B's system
Vendors auto-reporting payment history
Creditors processing applications in D&B's Risk Management system
Businesses who list your company as a resource or reference
Individuals gathering data about your business
Suppliers who want to market to your company
But, most importantly, YOU! Because no one knows more about your business than you do
Gathered data will have a positive or negative impact on your D&B Rating and various scores, but there are ways that you can impact your rating simply by providing “real-time” information about your company to D&B. Without reliable data, your company can be downgraded or lose its rating altogether, essentially cutting off your ability to achieve credit.
There are three ways D&B can rate your business, either from the raw data flowing into the system from the resources shown above, or from data discerned from your company's financial statements, or from data gathered from and verified by from a principal.
Let’s start with a brief overview of the various ratings we see most often and what you can do to boost to your company up to the next level. The "NQ" rating stands for "Not Quoted". Generally, this rating is assigned to a company if D&B can no longer verify a business is in active operations. Once this rating is applied, all general information is removed, rendering the report useless and blocking it from being purchased when it has no beneficial information to determine credibility. FIX IT: If your credit file has an "NQ" rating, provide verifiable data about your business to D&B so the derogatory rating can be removed and your creditworthiness restored. A lot of businesses will have a "DS" rating, which stands for "Duns Support". A "DS" rating means that D&B acknowledges they have basic information about the company, but not enough to generate full scores and ratings. A "DS" rating occurs when data flows in from outside sources, but the information is out-of-date and inaccurate. Generally speaking, very little credit can be established for a company with a "DS" rating unless one of the principals offers a personal guarantee. FIX IT: If your company has a "DS" rating, you can register in D&B's free iUpdate portal to provide up-to-date information to help build instant scores for free. If your company's credit report has a "dash-dash" (--) rating, your credit profile is said to be “incomplete." While many think a "--" means they have no rating, quite the contrary. D&B is acknowledging your existence, but they're simply missing one or more pieces of data required for a “full” rating of your business. Like pieces of a puzzle that come together to create an overall picture, if one of the below pieces is missing, the picture is incomplete. FIX IT: In order to have full scores and ratings, you need to provide D&B with all of the below data, known as the "Super 7 Elements".
Company's physical address
Company phone number
Principals (names, titles, and time in service)
Industry codes (SIC codes)
Annual sales (or projected sales volume)
If your business is being rated according to its employee count, you will have one of these ratings — 1R2, 1R3, 1R4, 2R2, 2R3, or 2R4. The number before the R defines your employee count, with 1R meaning you have 10+ employees and 2R designating less than 10 employees. The number that follows the R represents the overall composite credit appraisal, with 2 being "good", 3 being "fair", and 4 being "limited". FIX IT: You can improve this rating by:
Disputing derogatory payment history or public filings off your file
Adding strong, verifiable data about your company
Adding positive payment history to your file
Submitting your company's financial statements to D&B
If a company provides financial statements to be placed into the public profile, D&B will rate the business on its financial strength using the Profit and Loss report and Balance Sheet to comprise a numbered ranking, starting at 5A (over $50,000,000) and working down to HH ($5000 or less). The letter classification will be followed by the score for the composite credit appraisal: 1 for "good", 2 for "fair, 3 for "limited", or 4 for "poor". FIX IT: While companies are not required to provide their financial statements unless they are publicly traded, many choose to do so as a means of proving their financial strength or off-setting negative data, such a bankruptcies or poor Financial Stress Scores.
You can see an entire breakdown of these and more ratings here. When you understand the value of a full D&B rating, you can work toward its positive impact and boosting business credit approvals. If you need help ensuring D&B has all of the pieces of your puzzle, reach out for assistance. You'll be amazed that by spending just a little time and effort on your credit file, you can have an immediate and lasting effect on your business going forward.
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