THE D&B RATING

 

You should know... One of the driving forces that determines your ability to achieve business credit is the rating generated for your company by Dun & Bradstreet.  Contrary to what most frustrated business owners believe, there is no mystery formula, no secret algorithm, and no personal influence being weighed to produce this deciding factor.

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Your D&B rating is based on information gathered from the sources D&B trusts.

 

D&B rates businesses in one of two ways:

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• by size, either by:

  • reviewing your company's financial statements, (or)

  • identifying your employee count

• by overall composite credit appraisal, including:

  • payment history

  • viability of data

  • ongoing business activity

  • ongoing creditor activity

 

Here's an overview of D&B's rating classifications...

 

NQ - This is an acronym for Not Quoted.  This rating is generally assigned to a company if D&B cannot verify a business is in active operations.  When D&B has repeatedly attempted to validate a company and cannot, they remove any and all information from the report and place an NQ rating to restrict any lender or creditor from having to pay to view a report that will provide absolutely no beneficial information to help determine creditworthiness.

 

DS - This is an acronym for Duns Support, which basically means that D&B can acknowledge that a company exists, but they do not have enough of the required information to be able to generate scores and a full rating.  This is the most common rating we see when a company does not know a D&B report was created for their company or have taken none of the necessary steps to fill their credit file with worthwhile data.  Generally speaking, no credit will be established for a company with a DS rating.

 

-- - Known as a dash-dash rating, it signifies that your company's credit profile is "incomplete". While many think this means they have no rating, quite the contrary, D&B acknowledges your existence and is simply missing one or more pieces of data that allows them to create a "full" rating of your business.  There are seven required data elements, known as the Super 7, that allow D&B to make a viable determination as to your creditworthiness.  They are like pieces of a puzzle that come together to create an overall picture.  If one piece of that puzzle is missing, the picture is incomplete.  We can spot the missing element and help you boost a -- rating.

 

1R2, 1R3, or 1R4 - 2R2, 2R3, or 2R4 - When a rating is based upon employee count (meaning no financial statements have been submitted) there are two classifications: 1R for 10 or more employees (or) 2R for less than 10 employees.  The number that follows the R is representative of the overall composite credit appraisal.  If the R is followed by a 2, the overall information in your report says you are a good credit risk.  If the R is followed by a 3, the risk in extending credit it moderate.  If the R is followed by a 4, the risk is elevated and the lender may rethink offering you Net30 terms.  We help you to fill your report with credible payment history to keep that risk low.

 

5A to HH - If a company provides financial statements, D&B will rate the business on its financial strength, gauged upon a composite of the Profit and Loss report and Balance Sheet.  The ratings will range from a 5A for $50 million or more, all the way down to an HH for $5000 or less.  The letter classification will be followed by one of the following: 1 for low risk, 2 for minimal risk, 3 for moderate risk, or 4 for increased risk.  While companies are not required to provide their financial statement into the public record unless they are a publicly traded company, many choose to do so because, in most cases, this disclosure will better represent the financial strength of their business and will lower their risk ratings, thus improving their D&B rating.

 

Believe it or not, YOU can impact this score faster than anyone or anything.

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We can help you to understand the value of a full D&B rating and the impact it can have on your business credit approvals.  One of our foremost tasks is to make sure D&B has all of the required pieces of data so a solid composite credit appraisal can be made for your company.  We know if we can't see a particular piece of information, then D&B will not be able to see it either, and will therefore not be able to validate your company and generate a full rating.

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As a part of our process, we gather as much information as possible from you, review it for accuracy, and then help you to submit it to D&B using proper channels to insure they can validate it.  With the correct data in their hands, D&B will be able to gauge your company's creditworthiness and provide your rating to the lenders and creditors who rely on that data and the scores and ratings that influence their lending decisions.  With a full picture of your company intact, we can help to get you the credit approvals you need for growth and investment.

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If you would like to receive free information or a free one-on-one consultation, please subscribe to our free bi-monthly Business Credit Basics training emails, or give me a call to see what we can do to put your D&B Rating where it needs to be to move your business forward.

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