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Understanding Dun and Bradstreet’s business credit scores

What SMB business owners need to know about the most popular credit scores

D&B credit scores for SMB owners

Dun and Bradstreet is one of America’s oldest credit bureaus. Unlike some of its competitors that work in the consumer and business space, D&B is entirely focused on providing credit scoring and reporting on businesses. D&B tracks almost 300 million businesses around the world and is a major player in business credit and scoring.

The challenge with business credit scores

There are tens of millions of small and medium businesses in the U.S. About 50 percent of all firms in the U.S. are home-based businesses. Because credit reporting for businesses is primarily voluntary, it becomes very hard for any firm or credit bureau to be able to track and score all these firms’ credit histories. D&B was founded over 175 years ago to help grease the wheels of doing business with other businesses.

Without credit scoring, vendors are at risk if they want to extend credit or favorable payment terms to a new business customer. Banks and other lenders need credit scores to understand how risky lending to a business may really be. Presenting a strong credit history and quality credit score can make a huge difference in a business’ life.

D&B has emerged as one of the major players in the business scoring industry. Before you can begin to analyze a particular company’s credit, you need to first create a numbering system to account for and classify all the millions of businesses out there. Enter Dun and Bradstreet’s D-U-N-S number.

The DUNS number

D&B provides a Data Universal Numbering Systems to help keep track of all the various businesses out there. Like an individual’s social security number, the DUNS number is a unique nine digit number that has become somewhat of a standard business identifier globally. The U.S. government even requires businesses that want to do business with the federal government to submit their DUNS number as part of its vendor approval process.

You can search for a business by the company name or telephone number to see if it already has a DUNS number. If it doesn’t, it takes about 30 days to apply for and receive a DUNS number if your business doesn’t have one. It’s free to register for a DUNS number. You’ll be asked to fill out some information about your business to get a DUNS number. To qualify for a DUNS number, your business will have to be set up as a separate entity.

Getting a DUNS number is free but D&B does provide a rush service to expedite the process.

D&B PAYDEX score

D&B’s DUNS number merely creates a record and the beginning of a credit file for a business. D&B provides credit scoring services that essentially grade how creditworthy a business is. One of the most popular business credit scores is Dun and Bradstreet’s PAYDEX score.

PAYDEX looks at a business’ last 12 months of payment history and scores a business’ payment performance from 1 to 100. A business that always pays on time will receive a score of 80. To improve a score beyond 80, PAYDEX would need to see early payment of bills. So, for example, if a certain payment cycle is every 30 days, a business would need to pay before the end of the payment cycle to get a higher score.

PAYDEX needs at least three tradelines to generate a score. That just means that a business needs to establish three or more accounts with different vendors that report to D&B. Another thing to note is that the PAYDEX score is dollar-weighted, which means that larger bills will impact the score more than smaller ones will.

D&B’s CreditSignal

Once a company has a DUNS number and a PAYDEX score, an owner of a small business can continue to monitor her business’ credit report. D&B offers its own service, CreditSignal, which alerts you to changes to your D&B credit report.

CreditSignal from D&B credit report alerts

When you register for free to CreditSignal, you’ll receive an email whenever there is a change to your D&B credit score. You can see if your PAYDEX score has gone up or down as well as how a few other D&B scores, like Commercial Stress and Financial Stress, have performed.

CreditSignal also allows you to see if there were any inquiries on your credit file. That’s when other businesses contact D&B to look at your credit file. You won’t be able to see which particular businesses requested your credit score but you can see the industry it operates it.

CreditSignal is a useful monitoring service but is limited in what information is shared. You can’t see who pulled your credit report and you won’t see your actual credit scores in the alerts — just whether they improved or worsened. To get at that information, D&B wants you to pay for a premium business credit monitoring or credit building solution that it offers.

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