Dun & Bradstreet (D&B) is a leading provider of commercial data and analytics, with over 600 million records on businesses worldwide—more than any other provider. Its data helps companies assess the financial health and reliability of businesses before entering contracts with them. For example, a supplier might check a buyer’s D&B scores before offering net-30 payment terms.
If you’re a small business owner, registering with D&B and building a strong profile can boost your credibility and open doors to future opportunities. But what does D&B track? While it monitors a wide variety of proprietary performance indicators, here are six key D&B credit scores you’ll want to understand and monitor.
1. D&B PAYDEX Score
Scale: 1 to 100
Best Score: 100
Measures: Past payment performance
The D&B PAYDEX Score reflects how promptly your business pays bills on a scale from 1 to 100, with higher scores indicating better payment habits.
PAYDEX Score categories:
- Low risk: 80 to 100
- Moderate risk: 50 to 79
- High risk: 0 to 49
D&B bases the PAYDEX score on payment records submitted by suppliers and vendors, and can factor in data from up to 875 business partners. The indicator is also dollar-weighted, meaning that late payments on larger amounts will have a greater negative impact than late payments on smaller amounts.
You can improve your PAYDEX Score by choosing lenders and suppliers that report to D&B and making all your payments on time.
2. D&B Delinquency Predictor Score (DPS)
Scale: 101 to 670
Best Score: 670
Measures: Likelihood of severely delinquent payments or defaults
The D&B Delinquency Predictor Score (DPS) predicts the likelihood that a company will become severely delinquent, which means 10% of its payments are more than 90 days past due. It also aims to predict if a company will seek legal relief from creditors or go out of business without paying its debts within 12 months.
The DPS has three components:
- Score of 101 to 670: The score represents the risk level. The higher the score, the lower the probability of severe delinquency.
- Percentile of 1% to 100%: This percentile shows where a company falls among all the businesses D&B tracks. The higher your percentile, the lower your risk of severe delinquency.
- Class of 1 to 5: The class categorizes companies into five risk groups. The lower your class, the lower the probability of severe delinquency.
D&B uses a predictive modeling analysis to generate these scores. It collects various types of data, such as past trade payment records, business demographic information, financial data, and public filings, on 30 million businesses. Each time a new piece of data arrives for a company, its DPS is recalculated.
3. D&B Failure Score
Scale: 1,001 to 1,875
Best Score: 1,875
Measures: Likelihood of a company defaulting or going out of business
The D&B Failure Score, previously the Financial Stress Score, gauges the likelihood that a business will face severe financial stress in the next 12 months. More specifically, it aims to predict if a business will seek relief from its creditors or go out of business without fully paying off its debts within the next year.
The D&B Failure Score also has three components:
- Score of 1,001 to 1,875: The score communicates risk level. The higher the score, the lower the probability of failure.
- Percentile of 1 to 100: This percentile shows where a company falls among all the businesses D&B tracks. The higher your percentile, the lower your risk of failure.
- Class of 1 to 5: The class categorizes companies into five risk groups. The lower your class, the lower the probability of failure.
The D&B Failure Score is based on public records, past payment behavior, financial statements, and a company’s demographics. If you want to improve this score, be sure to pay all your bills on time, proactively submit trade references to D&B, and keep D&B updated with the latest information about your company.
4. D&B Rating
Scale: 5A to HH, 1 to 4
Best Score: 5A, 1
Measures: Overall creditworthiness
The D&B Rating assesses a business’s financial strength and creditworthiness using two components:
- Company size: The evaluation of a company’s size is based on its net worth or equity. D&B places companies into one of 15 possible classifications after reviewing their most recent financial statements.
- Composite Credit Appraisal: D&B will perform the Composite Credit Appraisal to judge a company’s creditworthiness. Companies are ranked on a scale from 1 to 4, with 1 being the most creditworthy score.
You can impact your D&B Rating by growing your company’s net worth, working with lenders that report payments to D&B, making all your payments on time, and submitting your company’s financial data directly to D&B.
5. D&B Maximum Credit Recommendation
Scale: Custom (based on business profile)
Best Score: NA
Measures: How much credit a company should receive
The D&B Maximum Credit Recommendation provides a recommendation for the maximum amount of credit D&B recommends a lender should extend to a company. The recommended amount is based on a business’s size, industry, and payment history. Further, it’s accompanied by an assessment of how likely the company is to experience financial stress in the upcoming year. Companies may be deemed low risk, moderately low risk, moderate risk, moderately high risk, or high risk.
6. D&B Supplier Evaluation Risk (SER) Rating
Scale: 1 to 9
Best Score: 1
Measures: Likelihood of a supplier defaulting or going out of business
The D&B Supplier Evaluation Risk (SER) Rating predicts the likelihood that a supplier will request relief from creditors or shut down within 12 months. The rating scale runs from 1 to 9, with 1 indicating the lowest risk. Ratings are based on factors such as a business’s number of employees, net profit, total assets, total liabilities, and payment records. Companies hiring subcontractors and suppliers may require suppliers to meet a minimum SER rating to reduce supply chain risk.
Grow your business credit profile with Lili and D&B
D&B’s business credit reports help organizations assess the financial health and risk of other businesses. As a small business owner, you can position yourself as a trustworthy partner or customer by performing well across these six performance indicators.
If you’re not sure where to start, Lili’s recent collaboration with Dun & Bradstreet makes it easier than ever—no need to even open a new credit line. You can now enroll in The Lili BusinessBuild Program, where you can monitor these 6 key scores and receive real-time alerts to see what’s driving your credit scores and spot risks early. Plus, build your credit profile with every purchase with the new BusinessBuild Credit Card.
Learn more about building business credit through a Lili business bank account!
Lili App Inc. (Lili) partners with CapitalOS and First Internet Bank of Indiana, Member FDIC, for the Lili BusinessBuild Card (the Card). Lili is a financial technology company, not a bank or lender. CapitalOS is a financial technology company and lender, not a bank. CapitalOS or one of its affiliates is the lender, and Cards are issued by First Internet Bank of Indiana, pursuant to a license from Visa U.S.A. Inc. The Card is a pay-in-full charge card. You must pay the full balance due every month.
Please note that Dun & Bradstreet (D&B) requires a minimum of six months of business history and at least three tradelines to generate business credit scores or ratings.
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