Do you know your company’s Dun & Bradstreet rating? You should.
Known as the D&B Rating, it affects the terms and conditions of relations with outside parties, and it determines the cost of any loans made to the business.
The information contained in a Dun & Bradstreet report also can make the difference between being awarded a work contract or not. Here’s our Dun & Bradstreet rating guide, complete with everything you need to know about the popular business scoring model.
What Is a Dun & Bradstreet Rating?
A D&B Rating is an overall evaluation of the financial strength and creditworthiness of a company.
The Rating is based on information in the company’s financial statements that have been furnished to Dun & Bradstreet. It has data about a business’s payment history, a comparison of a company’s standing within the industry and an evaluation of the company’s financial stability.
These ratings are divided into two parts: a rating classification and the composite credit appraisal.
D&B Rating Classification
Businesses that have supplied current financial statements to Dun & Bradstreet are assigned a rating classification. (D&B doesn’t assign a rating classification to companies that haven’t provided financial statements.)
A rating classification indicates the financial strength of a company based on its net worth or equity position. It is a combination of letters and numbers. At the high end, a 5A rating indicates a company with a net worth of more than $50 million, while an HH rating at the low end represents a company with a net worth less than $5,000.
Dun & Bradstreet Rating Scale
|Rating Classification||Net Worth (USD)|
|5A||$50,000,000 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 $4,999|
D&B Composite Credit Appraisal
The Composite Credit Appraisal part of the Dun & Bradstreet rating system represents a company’s overall creditworthiness. This score is based on a company’s payment history, years in business, public records, number of employees and financial information. It ranges from 1 to 4.
The most creditworthy businesses have a score of 1. A company that doesn’t give financial information to D&B can’t have a score higher than 2.
Dun & Bradstreet Rating Scale: Composite Credit Appraisal
|Composite Credit Appraisal||Net Worth (USD)||Condition|
|1||Low risk||High credit|
|2||Good risk||Good credit|
|3||Fair risk||Fair credit|
|4||High risk||Limited credit|
|–||Insufficient info. to assess risk level||Undetermined|
Suppose a company has a D&B Rating of 2A3. The 2A part of the Rating means that the company has a net worth of $750,000 to $999,999. A 3 rating signifies that transactions with the company pose a fair risk. A company that has a 5A1 rating has the highest D&B Rating: meaning their net worth is $50 million or higher and credit risk is low.
What’s Dun & Bradstreet?
Dun & Bradstreet maintains extensive commercial data and analytics on thousands of businesses. The company provides products and services for risk analysis, marketing and research on global trends.
The most well-known service is the D&B Rating for the creditworthiness of a company. If you’ve ever applied for a business loan, the prospective lender has more than likely requested a Dun & Bradstreet report on your company.
Other D&B Rating Models
In addition to the D&B Rating, Dun & Bradstreet has other models that rate the creditworthiness of a business.
How Are Dun & Bradstreet Ratings Generated?
Dun & Bradstreet produces its various ratings, scores and reports for a business based on public records, payment histories reported by creditors and the information that a company submits to the firm.
If you’ve ever made a late payment to a creditor or lender, it’s likely this information was reported to Dun & Bradstreet and is part of your company’s credit report.
Dun & Bradstreet uses statistical analysis, comparisons to industry standards, demographics and other data to make projections about the future performance of a business.
Why Do D&B Ratings Matter?
D&B Ratings matter because other companies may be using them to make decisions about doing business with your company. The information contained in these credit reports could help close a deal or doom it to failure.
Banks or lenders don’t only use dun & Bradstreet reports; they have other applications. Some examples of using Dun & Bradstreet reports include:
- Negotiating or renewing a lease
- Bidding on contracts
- Negotiating payment terms with suppliers
- Analyzing investments in other companies
Consider a typical business practice of extending net 30-day payment terms to customers. With 30-day terms, a business can get working capital to finance its inventory and customer receivables.
Being able to obtain supplier credit also could eliminate the need for resorting to invoice financing to fund operations. Companies with good ratings can receive vendor financing, while those with bad credit scores may have to make upfront payments to purchase supplies.
When you have a good D&B Rating, running a business is easier, and other companies are happy to work with you.
How Do I Get My Dun & Bradstreet Credit Rating?
The first step in getting a D&B Rating is to apply for a D-U-N-S number. It’s free.
After receiving a D-U-N-S Number, business owners can complete a Dun & Bradstreet Rating lookup by signing up with D&B for their CreditSignal service. This is a free service that notifies business owners of changes in their credit rating and scores and when another party has purchased a copy of the report.
Dun & Bradstreet does charge a fee to businesses seeking a complete report that contains all the information in their credit file. A business credit report for 1 company ranges from $61.99 to $189, depending on the option.
For business owners who’d like more detail than what’s available in their free CreditSignal report and would like to monitor their business ratings continually, Dun & Bradstreet offers 3 upgraded plans:
- $149 a month
- Business event notifications
- Detailed scoring explanations
- Expedited D-U-N-S number and business credit file
- Industry and peer benchmarking
In addition to the CreditBuilderPlus features, the premium plan features the following:
- Trade reference alerts
- Comprehensive reports on a company’s short- and long-term financial stability and creditworthiness
The cost for this service is $199 a month.
This subscription builds upon the other 2 models and includes the following:
- A dedicated team of business credit specialists
- 1-on-1 consultations
- Ability to scan your business information on the Web for inaccuracies and remove duplicate listings on Dun & Bradstreet’s network
Pricing is available upon request.
Why Did My Dun & Bradstreet Rating Change?
Many factors can cause your D&B Rating to fluctuate, including:
- Increased borrowing
- Late payments to suppliers
- Revised financial information about your company
- Lawsuit concerns
Be sure to check your report and public records periodically, so you’re not caught off-guard about a change in your D&B Rating. Stay on top of your credit file and report any inaccuracies immediately. Also, try to work with lenders that report to the credit bureaus and be sure to pay your invoices on time.
How Important Is a Dun & Bradstreet Rating?
Dun & Bradstreet reports are widely used and relied upon by lenders, creditors and suppliers when negotiating terms and making decisions.
A favorable D&B Rating can provide a company with working capital, result in lower interest loans, open doors to bigger clients and help win more contracts. It pays to watch your company’s Dun & Bradstreet file and make sure it’s up to date and correct.