Frequently Asked Questions on D&B

Frequently asked questions about business credit

What is business credit?
What role does your business credit play?
Why is my business credit important to me?
How does D&B compile my business credit profile?
How do other businesses get information about my business credit?
What kinds of credit scores and ratings does my Business Credit Report include?
Where does my business credit rating come from?
What do companies look at when they check my business credit?
Does every application go through this rigorous process?
Is it important to improve my business credit profile?
How can I protect my business credit profile?
Can I see what other businesses are saying about my business?
Will my business credit from the past follow me?
What can I do if the information in my business credit report isn’t correct?
When should I check my own customers’ credit?
Where do I go from here?


1.	What is business credit?
	Your business credit record is the primary way that companies evaluate whether to do business with you—and on what terms. Companies rely on your business creditworthiness to make critical decisions, including whether: to sell to you to lend you money you are viable as a partner to lease the equipment you need to grow your business to increase your line of credit to help you carry more inventory at competitive prices to give you favorable financing rates and terms you stack up favorably against other companies competing in your market space Business credit includes a variety of data points about your business, such as the date it started, the skills and experience of your top leaders, number of employees and annual sales. This type of information is listed in your business credit profile, along with scores and ratings that are derived from your business’s past behavior to predict its future behavior. For example, your ability and willingness to pay your bills on time in the past is factored into your ability and likelihood of paying your bills in the future.
	Back to top


2.	What role does your business credit play?
	Good credit is the lifeline of your business. It enables you to obtain funding for things like expansion, capital expenditures, research and development, and staffing. It is the principal contributing factor to your business’s future growth, not to mention the cash necessary for survival. Good business credit also allows you to keep the cash you have to cover your cost of doing business ; such liquidity lets you respond quickly to time-sensitive requirements, without halting or compromising operations. That is why you need the experts at D&B to help you establish, monitor, improve and protect your business’s credit.
	Back to top


3.	Why is my business credit important to me?
	Good credit is the lifeline of your business. It enables you to obtain funding for things like expansion, capital expenditures, research and development, and staffing. It is the principal contributing factor to your business’s future growth, not to mention the cash necessary for survival. Good business credit also allows you to keep the cash you have to cover your cost of doing business; such liquidity lets you respond quickly to time-sensitive requirements, without halting or compromising operations. That is why you need the experts at D&B to help you establish, monitor, improve and protect your business’s credit. It's not just about getting access to financing; business credit has increasingly become the primary vehicle for setting terms on business loans, determining insurance premiums, even setting lease payments. Good business credit can earn you lower rates, strengthening your cash flow.
	Back to top


4.	How does D&B compile my business credit profile?
	Information that goes into creating a business's credit profile comes from a variety of primary and secondary sources, such as: Payment and banking data from company suppliers Suits, liens and judgments, UCC's, business registrations, incorporations and bankruptcy filings from state and county courthouses Corporate financial reports Contracts, grants, loans, and debarments from the federal government Web mining News and media Yellow Pages and other print directories And, in the case of your D&B business credit profile, direct investigations and interviews with company principals (i.e. self-reported data) and other companies that you work with.
	Back to top


5.	How do other businesses get information about my business credit?
	D&B is the leading supplier of business credit reports worldwide. When a company wants to perform a business credit investigation on your business, they request it from D&B in the form of a business credit report, an integrated view of a company’s operations and finances. Credit managers and analysts use these reports to learn about your business credit and creditworthiness, so it is essential that you have one. Without reporting information, they may not be able to locate and, therefore, properly assess your business.
	Back to top


6.	What kinds of credit scores and ratings does my Business Credit Report include?
	D&B has created a proprietary set of key ratings and scores that use information gathered from these sources to present an unbiased view of creditworthiness. A complete D&B business credit report includes the following proprietary scores and ratings: D&B Rating: an overall assessment of your business’s creditworthiness and viability PAYDEX Score: a predictive indictor that measures the likelihood of your business paying within an agreed-upon timeframe Credit Limit Recommendation: D&B’s guideline as to how much credit should be extended to your business Financial Stress Score: a measurement of the likelihood that your company will experience financial stress in the next 12 months D&B uses statistical models to develop a business’s scores and ratings. The most significant contributing factor to that rating is the promptness with which businesses pay your bills. Mathematical methodology creates a score that shows, on average, how many days beyond terms you pay or whether you pay within terms. This information is factored into almost every score or rating that D&B provides. The more prompt the payment history, the better your business credit scores and ratings will be.
	Back to top


7.	Where does my business credit rating come from?
	D&B uses arithmetic scores and statistical models to develop a company’s numerical rating. The most significant contributing factor to that rating is the promptness with which they pay their bills. Mathematical methodology creates a score that shows, on average, how many days beyond terms the company pays or whether they pay within terms. The more prompt the payment history, the better your business credit rating will be. Another set of D&B scores goes beyond reporting of payment experiences and, based on the review of hundreds of thousands of businesses, provides predictive indication of how the company is likely to behave in the future. Many companies use these scores to determine your credit terms.
	Back to top


8.	What do companies look at when they check my business credit?
	A business’s creditworthiness is ultimately determined by what are known as the “4 C’s of Credit” -- character, capacity, capital and conditions -- most of which can be found explicitly or implicitly in a company’s credit report. Characte includes factors such as: size, location, number of years in business, business structure, number of employees, history of principals, appetite for sharing information about itself, media coverage, liens, judgments or pending law suits, stock performance, and comments from references. Capacity assesses the ability of the business to pay its bills, i.e., its cash flow. It also includes the structure of the company’s debt—whether secured or unsecured—and the existence of an unused lines of credit. Any defaults must also be identified. Capital assesses whether a company has the financial resources (obtained from financial records) to repay their creditors. In general, this portion of the credit report is the one most closely reviewed by the credit analyst. Heavy weighting is given to such balance sheet items as working capital, net worth and cash flow. Conditions consider the external factors surrounding the business under consideration - influences such as market fluctuations, industry growth rate, political/ legislative factors, and currency rates. A credit manager or loan officer will answer these questions by locating and reviewing: requests for credit information customer supplied information bank information trade information These factors are also taken into consideration by other service providers, such as insurance companies to set premiums. More than ever, companies are using automated decisioning, which means they input scores and ratings that summarize the 4 Cs into a financial model to determine the risk of doing business with you.
	Back to top


9.	Does every application go through this rigorous process?
	Depending on the size and type of business, these factors may be assigned numerical scores, which allow an application to be processed automatically, without the direct involvement of the credit manager. Given the relative size of small business loans, many financial institutions that process large numbers of applications typically use automated decision-making processes. Some of the most popular decisioning engines in use today cut-off scores to accept or decline the lion’s share of applications, relying on manual evaluation only in those cases that are inconclusive.
	Back to top


10.	Is it important to improve my business credit profile?
	For most businesses it’s not just important, it’s essential. You can influence of your business credit profile, and you can proactively improve your business’s creditworthiness; once you know what information is most important, you can pay more attention to it. In general, you can develop a strong business credit profile by: Paying on time. The payment experiences other companies have with you are the most impactful data in your business credit profile. For this reason, you should ensure that you pay within the terms set forth by your suppliers. This is the most direct way to ensure a positive credit rating. Ensuring all relevant trade experiences are represented. Are paying large sums on a timely basis to key suppliers and lenders that aren’t being reflected in your profile? If so, you are missing out on a key opportunity to get the credit you deserve for paying your bills on time and for conducting a larger volume of business than it appears you do. You should check your profile twice a year, to make sure that all the vendor payment relationships are captured. Keeping your personal finances in good order. If you are the owner of an emerging business, until your company develops a robust credit profile of its own, your consumer credit profile also may be reviewed by prospective creditors. How well you manage your personal finances can impact your company’s creditworthiness. Keep in mind, though, that your business and personal ratings are separate and distinct. One is not used to directly impact the other. Keeping your business credit profile in good order. At D&B, our goal is accuracy, timeliness, completeness and consistency of data. For this reason, we validate all of our data with third-parties, meaning we check to make sure the information that one company has on you is consistent with what others have. But, if two companies have incorrect information about you it is likely that this incorrect information will make it into your business credit profile, If you see accounts that aren’t yours, mistakes your bank made or false negative activity you’ve already addressed, you should address these inaccuracies in one of two ways: by signing up with D&B eUpdate, our online tool that allows businesses to easily update their data, or by calling our Customer Service Center at 877-753-1444. Keeping your debt financing down. The capital structure of your business—that is, the extent to which you use equity or debt to finance your operations—is an important determinant of your creditworthiness. If other companies see a lot of debt on your balance sheet, whether in absolute terms or relative to your competitors, they are less likely to extend credit as you pose greater risk of default. Contributing to your own profile. Some credit managers prefer detailed reports with a lot of supporting information, enabling them to assess risk based on a broader frame of reference. Communicating as much information about yourself as you can to D&B assures a more robust report. Likewise, doing business with companies that you know frequently report their experiences to us builds your profile. Keep an eye on the key financial indicators in your own report to see how they compare to other companies in your industry. In doing so, you can benchmark yourself, identify areas for improvement and assure a profile with adequate information for a satisfactory credit investigation. Learn more about improving your business credit.
	Back to top


11.	How can I protect my business credit profile?
	In addition to keeping your payments current, debt down, and revenues growing (the best ways to assure a strong credit profile), the most effective methods of protecting your credit are to: Regularly monitor what’s on your report quarterly and identify any information you think is incorrect. Notify creditors and D&B if you find any errors or discrepancies. You should also check your credit report for the three months prior to applying for a loan. Gradually close any accounts you’re not using, but not all at once. If too many are closed at one time, creditors may view it as a sign of financial difficulty. Close only one or two dormant accounts per month. Learn more about protecting your business credit.
	Back to top


12.	Can I see what other businesses are saying about my business?
	Yes. You can see your own credit report much as you would your consumer profile. Simply request it from D&B by visiting D&B eUpdate. You can also contact D&B at 877-753-1444 to find out what types of companies have made credit inquiries about your business.
	Back to top


13.	Will my business credit from the past follow me?
	Your business credit does follow you, especially with today’s enhancements to business credit databases that make it easier to track relationships with parent companies, subsidiaries and management. With its D&B D-U-N-S® number, your business will have a unique identifier that remains with the business forever and will never get reused.
	Back to top


14.	What can I do if the information in my business credit report isn’t correct?
	At D&B, we strive for accuracy, timeliness, completeness and consistency of data. If you see accounts that aren’t yours, mistakes your bank made or false negative activity you’ve already addressed, you should address these inaccuracies in one of two ways: by signing up with D&B eUpdate, a simple tool to ensure our database contains the most up-to-date information on your business or by calling our Customer Service Center at 877-753-1444.
	Back to top


15.	When should I check my own customers’ credit?
	Companies are more fluid than you might think, so you should never assume anything about their “4 C’s” unless you are monitoring them. Fortunately, it is now easier than ever to track the status of your most important customers through online alert systems that notify you of material changes in the credit reports of designated accounts. You’ll find more information on our products at http://smallbusiness.dnb.com/credit-reports/browse-products.asp
	Back to top


16.	Where do I go from here?
	With our unsurpassed global data collection system, D&B continually gathers the data that initiates the creation of business credit profiles on new companies. Many kinds of activities can trigger a profile on a new company, such as incorporating your business, applying for a loan, getting a business telephone number, taking out a lease on office space – even just when another company seeks information from D&B about your business. Still, a new business, may not have a complete business credit profile. Getting a D-U-N-S Number from D&B --the worldwide standard for business classification systems – is an essential part of helping you establish your business credit profile and will ensure that when a company looks you up in the D&B database that they will find you. A D&B D-U-N-S® Number is so important that without it you cannot do business with some entities, such as the US government. You should make sure you have a D&B business credit profile if: You are planning to obtain a business loan You need to purchase or lease equipment Your cash flow is tight You want to ensure you are getting a fair deal from lenders compared to your competition You want to pay net 30 days instead of COD (Cash On Delivery) You are paying interest at prime plus 1 or higher These issues and dozens other like them can be addressed by having a strong business credit profile. A good rating provides you with the financial freedom to take the steps you need to grow, and is a straightforward, unbiased method for other companies to assess your level of risk when considering taking you on as a creditor. A poor credit rating is a certain barrier to growth and success, preventing you from getting adequate funding on fair terms. Communicating directly with D&B will help establish your business credit in less time. If you ae a new company, D&B can help you build a complete business credit profile from the ground up; if you have been in operation for a while, you will want to improve and/or protect your business credit profile. Find out more about how to establish, monitor, improve, or protect your business credit.
	Back to top