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Guide to Ratings, Scores and IndicesKeys to the most common Dun & Bradstret scores, indices and ratings

Paydex

The PAYDEX index is a unique dollar-weighted numerical indicator of how a firm paid its bills based on trade experiences reported to D&B through its trade program.

The Paydex indices are updated daily, so payment changes are quickly identified.

Paydex Keys  
100 Anticipate payment before terms
90 Discount
80 Prompt - payment within terms
70 15 days beyond terms
50 30 days beyond terms
40 60 days beyond terms
30 90 days beyond terms
20 120 days beyond terms

Measurement Range How to interpret Paydex 1-100 100 is the best

Financial Stress Score (FSS)

The Canadian D&B Financial Stress Score (FSS), also known in some markets as the D&B Failure Score, predicts the likelihood that a business will seek legal relief from its creditors, cease busi¬ness operations without paying all its creditors in full, voluntarily withdraw from business operations and leave unpaid obligations, go into receivership or reorganization, or make an arrangement for the benefit of creditors over the next 12 month period, based on the information in D&B’s files.

Financial Stress Risk Class % of Businesses Within This Financial Stress Risk Class Financial Stress Percentile Financial Stress Score
1 6% 95-100 1561 - 1890
2 26% 69-94 1493 - 1560
3 35% 34-68 1432 - 1492
4 32% 2-33 1294 - 1431
5 1% 1 1001 - 1293

How to Interpret the Measurement Range

Raw Score 1001-1890 where 1890 is the best

Percentile 1-100 where 100 is the best

Risk Class 1-5 where 1 is the best

Commercial Credit Score (CCS)

The Canadian D&B Commercial Credit Score predicts the likelihood that a company will pay its bills in a severely delinquent manner (90+ days past due) over the next 12 months, based on the information in D&B’s files. A severely delinquent firm is defined as a business with at least 10% of its dollars slow and at least 10% of its dollars 90 days or more past due.

Credit Score Risk Class % of Businesses within this Credit Score Class Credit Score Percentile Commercial Credit Score
1 16% 85-100 566-690
2 51% 34-84 469-565
3 14% 20-33 423-468
4 31% 7-19 310-422
5 6% 1-6 101-309

How to Interpret the Measurement Range

Raw Score 1001-1890 where 1890 is the best

Percentile 1-100 where 100 is the best

Risk Class 1-5 where 1 is the best

D&B Composite Credit Rating (Canadian)

This unique D&B rating shows the financial strength and overall health of a business.

Estimated financial strength Composite credit appraisal      
  High Good Fair Limited
5A: 50,000,000 and over 1 2 3 4
4A: 10,000,000 to 49,999,999 1 2 3 4
3A: 1,000,000 to 9,999,999 1 2 3 4
2A: 750,000 to 999,999 1 2 3 4
1A: 500,000 to 749,999 1 2 3 4
BA: 300,000 to 499,999 1 2 3 4
BB: 200,000 to 299,999 1 2 3 4
CB: 125,000 to 199,999 1 2 3 4
CC: 75,000 to 124,999 1 2 3 4
DC: 50,000 to 74,999 1 2 3 4
DD: 35,000 to 49,999 1 2 3 4
EE: 20,000 to 34,999 1 2 3 4
FF: 10,000 to 19,999 1 2 3 4
GG: 5,000 to 9,999 1 2 3 4
HH: up to 4,999 1 2 3 4

Factors considered in Composite Credit Appraisal Ratings (1,2,3,4)

This chart contains general guidelines for delivering a composite credit appraisal rating. The various factors or conditions require balancing and weighing that is often complex, taking into consideration numerous variables, before a rating can finally be determined.

Each new situation can be unique, and there are exceptions to almost every guideline. (In a given instance for example, one factor alone may have a significant impact on the rating assigned.) The final rating is assigned by a senior D&B business analyst, with exceptional cases going to our National Rating Committee for review and approval.

  1st line (high) 2nd line (good) 3rd line (fair) **4th line (limited)
  If all conditions listed below are favourable If most conditions listed below are favourable Still considered credit worthy, but with some of the following unfavourable elements Even greater elements of risk, credit-worthiness limited
Payments Satisfactory; suitable explanations for any slowness Generally satisfactory; suitable explanation for slowness Significant slowness Significant, even chronic slowness
Finance * Statements regularly obtained; Usually comparative figures; Strong condition; Upward trend * Statements obtained; Sound condition; Trend usually favourable * Statement obtained; Condition unbalanced; Operating losses; Impaired cash flow; Heavy debt * Statement obtained; Condition unbalanced; Even heavier losses and debt
History At least one year back — three years preferably; Adequate assurance of ownership No minimum years if other factors satisfactory; Adequate assurance of ownership Adequate assurance of ownership Adequate assurance of ownership
Antecedents Experienced in all aspects of business management; No recent business failures, felonies, charges or convictions that would have a serious impact on business If new, previous experience in line or in successfully managing a previous business; No recent business failures, felonies, charges or convictions that would have a serious impact on business May lack balanced experience, or experience in line; Consider impact on business of any recent business failures or felony convictions May lack balanced experience, or experience in line; Consider impact on business of any recent business failures or felony convictions
Other Other factors considered for their possible favourable or unfavourable influence on a business include: operation or location, bank records, public record information, general economic factors, and industry or local conditions.      

* “Book” figures are required where tangible net worth is $50,000 or more. In cases where tangible net worth is under $50,000, ratings can be assigned based on estimates, preferably signed by a company principal.

** “Limited” or 4th line ratings: A business is given a limited rating only if it has managed to operate in spite of unfavourable conditions over a significant period of time. It is often more appropriate, especially with larger, and thus more complicated concerns, to assign a blank (--) rating. The latter indicates the absence of a rating and the advisability of drawing the D&B report for full details.

Capital ratings (estimated financial strength) are derived by what is usually a comparatively simple mathematical procedure. Determining the tangible net worth produces the capital rating.

Employee Range Designation (ER)

Certain businesses do not lend themselves to a D&B rating. Instead, these business reports carry an employee range (ER) designation, which is indicative of size based on number of employees. No other significance should be attached to this classification.

Key to employee range designation  
ER1 1000 or more employees
ER2 500 to 999 employees
ER3 100 to 499 >employees
ER4 50 to 99 employees
ER5 20 to 49 employees
ER6 10 to 19 employees
ER7 5 to 9 employees
ER8 1 to 4 employees
ERN Not available

FB (foreign branch): Indicates that the headquarters of this company is located in a foreign country (including the U.S.). The summary section of the report contains the location of the headquarters.

FBN: These letters indicated on a report mean that the business is not listed in the reference book and that the headquarters is located in a foreign country.

NLP: These letters mean that this firm does not appear in other D&B publications.

NQ: This is a D&B rating indicating that a particular legal entity is no longer trading due to amalgamation, a buy-out, or operations having ceased (including business failure or dissolution). It is also used for businesses that we could not locate using our extensive investigative resources.

Explanation of a D&B Record

Indicates the history of the business and its management. It may be one of the following:

Clear No criticized failures, fires or convictions — either business or personal. Also indicates full information is contained about the background of its principals, including either:
  • Information covering the last 14 years.
  • Information back to the age of 21.
  • Information covering the last three jobs the person held.
Business Used when the following information relates to the business itself, a parent corporation, or a subsidiary:
  • The business files for receivership or initiates a proposal to creditors in the past 14 years.
  • The business has had a criticized fire within the last 14 years.
  • The business has a record of recent judgments issued or unsatisfied, involuntary liens. (Infrequent judgments issued against the company will not mandate a business record.)
Management Selected when insolvencies are related to companies affiliated by common ownership in the past 7 years.
Incomplete When management has declined to provide information on the background of the company and owner(s) and the investigation outside quarters has resulted in:
  • Incomplete identification of principals of the business.
  • Instances where none of the three conditions required for a clear record were satisfied.
  • Gaps in the history of the principals.
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