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5 D&B Business Credit Scores You Must Know About

Credit Suite - Monday, August 22, 2016

A business credit score reflects the business’s likelihood of defaulting on an obligation, not the business owner’s. The business credit score is based on how the business obligations are being paid, not how the business owners pay their personal obligations.

Dun & Bradstreet is the biggest and major business credit reporting agency. They were created in 1841.They are commonly known as D&B and they provide five separate business credit scores that evaluate different forms of risk.

Dun & Bradstreet’s five credit scores and ratings showcase a company’s strengths or weaknesses to vendors, suppliers, and lenders. A full D&B report contains five unique types of business credit scores and ratings. D&B also offers three types of Predictive Scores which predict how a business will perform over the next 12 months. There are two types of Performance Scores D&B based on a company’s past performance.

Predictive Scores predict a company’s expected performance over the next year, or 12 month time period. D&B provides three Predictive scores which are The D&B Delinquency Predictor Score, The Financial Stress Score and The Supplier Evaluation Risk Rating.

The D&B Delinquency Predictor Score predicts whether a business will pay its bills on time. It actually predicts the likelihood that a business will make a severely delinquent payment. D&B defines “severely delinquent” as 91 days or more past terms, so basically someone is severely delinquent when they pay more than 90 days late. The true definition from D&B is… “Delinquency Predictor Score predicts the likelihood a business will pay severely delinquency within the next 12 months.”

The D&B Predictor Score ranges from 101-670. The higher the score the lower is the risk. The D&B Delinquency Predictor Score is further broken down into five classes, Class 1 reflects a Low Risk of late payment, and Class 5 reflects a High Risk of late payment.

D&B’s Financial Stress Score predicts whether a business will experience financial distress or failure. The true D&B definition is… “The Financial Stress Score is used to predict the likelihood that a company will obtain legal relief from creditors or cease operations without paying all creditors in full over the next 12 months”

The score ranges from 1001-1875. The higher the score the lower is the risk. The D&B financial stress score is broken into five different Classes. Class 1 reflects a Low Risk of late payment while Class 5 reflects a High Risk of late payment.

Dun & Bradstreet’s Supplier Evaluation Risk Rating is known as the SER Rating. The SER rating also predicts the likelihood that a supplier will cease business operations or become inactive over the next 12 months. It predicts whether your company will deliver goods and services as promised.

It predicts the likelihood that a business will stop delivering their goods and services. Scores range from 1-9, the higher the score HIGHER the risk. Your SER rating is influenced by D&B data including past payment performance, demographics, financial information, outstanding lawsuits, and liens.  

The D&B Rating indicates a company’s net worth range based on company financial statements, as well as a company’s overall financial condition. If a company’s financial statements are not provided, the score is based on company size, industry, or other related factors.

The D&B Rating is a performance score that’s based on a company’s net worth and overall credit assessment. The D&B Rating is broken into three distinct categories. Category is assigned based on the amount of information available on a company including financials. The true definition from D&B is… “D&B Rating is a performance score based on a company’s net worth from its financial statements as well as an overall credit assessment using information in D&B’s database.”

Dun & Bradstreet’s Paydex Credit Score is the most popular and well known business credit score. It indicates how quickly a company has paid its bills. The true definition from D&B is…“ D&B Paydex is a dollar-weighted indicator of a business’s payment performance based on payment experiences in a company’s D&B’s file”.

The Paydex score is “weighted”, meaning the bigger the bill, the more “weight” it can have on the D&B score. This score gives more weight to the trade accounts that report higher amounts of credit extended and less weight to trade accounts that are reporting lower dollar amounts of credit.

The Paydex score ranges from 1-100. Higher scores are lower risk as they predict better payment performance. Any score of 70 and higher D&B defines as a “good” score. An 80 score reflects Prompt Payment. A score of 70 reflects payments are paid within 15 Days of terms. Scores 50 or lower represent payments being made 30 or more days past terms.

Dun & Bradstreet’s five business credit scores have a big impact on how your business is viewed by others. Insure you are diligent in establishing and keeping your scores as high as possible to get the best return from your business credit.

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