Did you know you can have 1000 payments in your D&B credit report and still not have a full D&B Rating? All the payments in the world won't mean a thing if D&B doesn't consider your company to be a viable enterprise. In fact, they may even block your vendor payment history from flowing into your file if your rating isn't complete. A missing D&B Rating can stymie your company's creditworthiness.
In general, the D&B Rating is generated once D&B can see your company is viable, whether from the data flowing in automatically from third-party resources or from verifiable data business owners themselves provide, including the "Super Seven" elements:
Physical / mailing address
Legal structure / start date
Principals / titles / time-in-service
Industry / SIC-codes
Providing the above information is easy, but there are also two more elements D&B won't tell you about — and these are what can keep your company from being deemed creditworthy.
A full D&B Rating is borne from confidence and predictability.
Confidence starts with the verification of the above "Super Seven" elements, but it is further strengthened when matching data flows in from outside resources, such as your Secretary of State's business registration portal, vendors who generate inquiries when you open a new account, or lenders who process credit applications through D&B's risk management software. When the data that flows in from outside sources matches what is already in D&B's system, confidence is bolstered and your company earns valuable points toward earning its rating.
Predictability can only come from one place: payments. Whether they flow in from trusted vendors and creditors who auto-report, or are manually submitted by you and verified by D&B's trade fulfillment team, payment history proves other companies have done business with you, have matching information on file about your company, and have trusted your business with credit in the past. When at least five credit-based payments get reported to D&B — yes, even derogatory payments — they help to determine predictability about how your company has managed and maintained the credit it has already achieved.
A Guide to D&B Ratings
A D&B Rating defines your company's Financial Strength and Composite Credit Appraisal in one of two ways: with financial statements or without.
Without Financial Statements
If you have not provided financial statements to prove your company's financial strength, your D&B Rating is determined by your overall employee count:
1R designates businesses with 10 or more employees
2R designates businesses with fewer than 10 employees
and how your suppliers have reported that you pay your bills:
2 = HIGH (within terms)
3 = FAIR (generally on-time)
4 = LIMITED (poorly)
So if your company has a D&B Rating of 2R3, this tells your suppliers that you have fewer than 10 employees and generally pay your debts on time, but may have a blemish on your file from time to time.
With Financial Statements
Publicly traded companies are required to provide financial statements to D&B. Privately held companies don't fall under that same requirement, but they will sometimes decide to do so if it will help boost lackluster scores or derogatory information, such as lawsuits, being in a distressed industry, or having a bankruptcy in the file. The following table outlines how to interpret a rating when D&B does receive financials.
The first two digits determine the financial strength:
5A = $50,000,000 to and over
4A = $10,000,000 to $49,999,999
3A = $1,000,000 to $9,999,999
2A = $750,000 to $999,999
1A = $500,000 to $749,999
BA = $300,000 to $499,999
BB = $200,000 to $299,999
CB = $125,000 to $199,999
CC = $75,000 to $124,999
DC = $50,000 to $74,999
DD = $35,000 to $49,999
EE = $20,000 to $34,999
FF = $10,000 to $19,999
GG = $5,000 to $9,999
HH = up to to $4,999
and the number at the end determines the overall composite credit appraisal.
1 = HIGH
2 = GOOD
3 = FAIR
4 = LIMITED
So if your company has a D&B Rating of 1A2, this tells your suppliers that your company makes between $500,000 and $749,999 and has a strong history of paying your debts on time.
Other Possible Ratings
An ER Rating = Certain lines of business, primarily banks, insurance companies and government entities, do not lend themselves to a classification or assignment of a Rating based on their net worth. They are generally given an ER Rating, followed by a number that determines their employee count, such as ER6 (fewer than 20) or ERN (undetermined).
A DS Rating = A company with a DS rating either has very little information in the file, or the information that is there cannot be verified. For the most part, companies with a DS rating will have a harder time achieving credit from vendors and suppliers and will usually be required to prove themselves, either by prepaying for their initial orders or providing a personal guaranty.
A -- Rating = The "dash dash" rating does not mean your company doesn't have a rating, but rather that your file is "incomplete". There's usually one or more piece(s) of information missing, such as a viable phone number, physical address, or the required number of payment experiences.
An INV Rating = If your company has an INV rating, it usually indicates D&B is investigating your company due to potential fraud, theft, or abuse. If you haven't been contacted by D&B's Severe Risk Team yet, you should prepare yourself for that call and the answers (and documentation) you may be required to provide.
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