What do d&b credit ratings mean?

Written by joey campbell
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Dun and Bradstreet credit ratings are a way for other companies to look at how well a company is doing in the field that its business represents. They are the largest and most recognised credit reporting agency in the world for businesses. Unlike Equifax, Experian and Trans Union personal credit reporting agencies, their reports go much deeper than just payment history and public records. Dun and Bradstreet offers six different reports or views on each company listed, each specialising in specific areas of the company being looked at. The speciality report called "The Score Report" concentrates on all scores and rankings of how the company compares with others in the vast Dun and Bradstreet database.

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Score Report

One of the six reports offered by Dun and Bradstreet is a "Score Report." This report focuses on scores and rankings. It gives the D-U-N-S number that allows the user to compare a company with others that are competitors. It includes information on the nature of the company's business, the management and when they took control. It gives a 1 to 100 score percentile that indicates how this company rates against others in the D&B database. The credit score class divides companies into five categories and ranks them from 1 to 5. The 101 to 660 score model is a predictor of account payment delinquencies as compared with other similar businesses located in the D&B database. The D&B Paydex score model is included to compare a company's payment history with other companies in the database. If you are considering doing business with a company, the PAYDEX Score is important since it will show you who the "slow and delinquent payers" are. (Late or slow payments are an indicator that a company is experiencing financial stress).

1 to 100% Comparison

The Dun and Bradstreet's Score Report gives a 1 to 100 per cent comparison with other companies in the D&B database. This score expresses the risk of doing business with a company down to numbers. It will show you if the risk level is high or low. In this scoring model, a lower number equates to high risk, and a higher number (such as 100), would equate to very low risk in doing business with that company.

Five Credit Class Categories

The "Credit Score Classification" categorises companies into five levels based on risk to do business with. Companies in the D&B database can be rated anywhere between 1 and 5 in this category. (1 indicating low risk, and 5 indicating high risk). A company that is extremely high risk could have a classification of 5. This class would include a company that had experienced very delinquent accounts and even bankruptcy, making them one that you might want to avoid doing business with.

The very best score, which indicates extremely low risk, is a classification of 1.

101 to 670 Score

The Dun and Bradstreet scoring report gives another scoring model, the 101 to 670 scoring. This section covers the likelihood that a company will make payments in a timely manner or allow their accounts to become delinquent. This score is based on an analysis of how the company makes payments. A high risk company would have a of 101 score; companies with the lowest risk would have a 670 score.

PAYDEX Score

The Dun and Bradstreet Score report gives a PAYDEX score. This score is totally based on how payments are handled. A score of 1 to 19 indicates that the company always pays obligations 120 days past the term agreement. A 100 score shows that payments are made as much as 30 days earlier than the agreement requires.

Five Other D&B Reports

The Score Report is just one of five reports that Dun and Bradstreet offers. These reports allow you to study other areas of a company and how it compares with others in the D&B database.

The Business Information Report (BIR) gives in-depth information on who owns the business, their experience, background, financial stability, and the firm's operations to make a risk decision on doing business with this company.

The Payment Analysis Report is a history of how the company being investigated makes its payments. This is helpful when extending credit to a company.

The Supplier Evaluation Report is important when considering using a company as a supplier. It gives yearly sales volume, operations and financial health of the supplier. It will contain public filings, records, bankruptcy or other disasters that may mean service problems.

The Business Background Report gives background of the company, senior management staff, parent company, networth analysis, number of employees, key personnel, sales, changes in ownership and values of stock.

The Comprehensive Report condenses information on financial health, stability and credit. It gives complete information covering payment history with scoring based on company size, number of employees, real estate owned and financial net worth. This report gives a current profile and a prediction for future health.

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