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Creditworthiness
 D&B Rating   |  Financial Stress Summary |  Credit Score Summary |  Additional Glossary Terms


D&B Rating
The D&B Rating can help you quickly assess a firm's size and composite credit appraisal, based on information in a company's interim or fiscal balance sheet and an overall evaluation of the firm's creditworthiness.

The "5A" to "HH" Rating Classifications reflect company size based on worth or equity as computed by D&B. Company size can be an effective indicator of credit capacity. These Ratings are assigned to businesses that have supplied D&B with a current financial statement.

The Composite Credit Appraisal is a number, 1 through 4, that makes up the second half of the company's rating and reflects D&B's overall assessment of that firm's creditworthiness. The Composite Credit Appraisal is based on D&B analysis of company payments, financial information, public records, business age and other important factors (when available).

Note: A "2" is the highest Composite Credit Appraisal a company not supplying D&B with current financial information can receive.

The "1R" and "2R" Rating categories reflect company size based on the total number of employees for the business. They are assigned to company files that do not contain a current financial statement.

ER (Employee Range) Ratings apply to certain lines of business that do not lend themselves to classification under the D&B Rating system. Instead, we assign these types of businesses an Employee Range symbol based on the number of people employed. No other significance should be attached to this symbol.

For example, a rating of "ER7" means there are between five and nine employees in the company. "ERN" should not be interpreted negatively. It simply means we do not have information indicating how many people are employed at this firm.

The D&B Rating field in a report may also display the following designations when certain conditions are present:
  • The '- -' Symbol: This represents the absence of a D&B Rating and should not be interpreted as indicating that credit should be denied. It means that the information available to D&B does not permit us to classify the company within our Rating Key and that further analysis should be made before reaching a credit decision. Some reasons for using the "- -" symbol include: deficit net worth, bankruptcy proceedings, lack of sufficient payment information or incomplete history indicator.

  • DS (DUNS Support): This indicates that the information available to D&B does not permit us to classify the company within our Rating Key.

  • INV (Investigation Being Conducted): When an "INV" appears, it means an investigation is being conducted on this business to get the most current details. Once the investigation is complete, a non-INV rating will be assigned.

  • NQ (Not Quoted): This is generally assigned when a business has been confirmed as no longer active at the location, or when D&B is unable to confirm active operations. It may also appear on some branch reports, when the branch is located in the same city as the headquarters.
Rating Classification Composite Credit Appraisal
        High Good Fair Limited
5A $50,000,000 to 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


Based on Number of Employees when financial statements are unavailable

Rating Classification Composite Credit Appraisal
    Good Fair Limited
1R 10 and over 2 3 4
2R 1 to 9 2 3 4


Key to Employee Range
Applicable to lines of business not covered by the D&B Rating system

ER1 1,000 or more
ER2 500 to 999
ER3 100 to 499
ER4 50 to 99
ER5 20 to 49
ER6 10 to 19
ER7 5 to 9
ER8 1 to 4
ERN Not Available


Financial Stress Summary
The US Financial Stress Score (FSS) predicts the likelihood of business failure over the next 12 months. D&B defines business failure as a company that obtains legal relief from its creditors, ceases business operations without paying all its creditors in full, voluntarily withdraws from business operations and leaves unpaid obligations, goes into receivership or reorganization, or makes an arrangement for the benefit of creditors, based on the information in D&B's commercial database.

The FSS Scores are calculated using statistical models derived from D&B's extensive database of U.S. businesses including Payment, Public Filing, Demographic, and Financial information when available. The Scoring System segments the universe of businesses into five distinct Risk Classes where a one (1) represents businesses that have the lowest probability of failure, and five (5) represents businesses with the highest probability of failure. The Financial Stress Score Percentile is a 1-100 ranking where a percentile of 1 has the highest probability of failure and a percentile of 100 has the lowest probability of failure.

A Financial Stress Score is available on U.S.-based companies with the exception of businesses that fall into the following categories:
  • Business Branch Locations. These inquiries will result in an automatic trade-up to a headquarter location.
  • Business records that are missing or have an invalid address.
  • Businesses that have been self-reported to D&B without an investigation. Such cases are added to the D&B database as DUNS Support records and will remain as such until a thorough investigation yields more substantial information.
  • Businesses designated as "Business Deterioration" records within one year (showing signs of financial stress, such as existing or imminent business failure or operating difficulty as reviewed and confirmed by D&B analysts. These companies continue to operate and have not filed for bankruptcy. These businesses are not assigned a score.
  • Businesses in industries and SIC codes that do not lend themselves to scoring through this type of model. These industries and groups include those with 2-digit SIC codes of 43 (United States Postal Service) and 90-97 (Public Administration, Government Offices).
What does it mean if a stress score is "Zero?" Financial Stress scores are not calculated for those businesses designated as "Discontinued at This Location," "Open Bankruptcy" or "High Risk ". These records are automatically assigned a score of zero (0).
 
Credit Score Summary
This section reviews an analysis of credit capacity (size, overall financial condition, payment capacity) to gauge the firm's ability to take on additional credit.

D&B's Commercial Credit Score is designed to predict the likelihood that a company will pay its bills in a severely delinquent manner (90 days or more past terms), obtain legal relief from creditors or cease operations without paying all creditors in full 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 25% of its payments slow and at least 10% of its payments 90 days or more past due.

The scoring models are based upon the observed characteristics of hundreds of thousands of businesses in D&B's database and the relationship these characteristics have to the probability of a company experiencing severe delinquency over a period of 12 months.

What do "class," "percentile" and "score" mean? The Commercial Credit Score uses statistical probabilities to classify companies into three risk classifications, which provide different views of the same underlying data. In most cases, the Credit Score Class is your best choice for at-a-glance risk assessment. The more detailed percentile and score classifications provide more granular views of this information, which can provide a more specific classification when you want to see precisely where a business falls on the spectrum of risk. The classifications are:

1. A "Class" of 1 - 5, which separates all businesses D&B has credit scores for into five distinct risk groups where a one (1) represents businesses that have the lowest probability of severe delinquency, and a five (5) represents businesses with the highest probability of severe delinquency. This Class enables you to quickly assess a new or existing account to determine appropriate risk policies.

2. A "Percentile" of 1 - 100, where a 1 represents businesses that have the highest probability of severe delinquency, and a 100 represents businesses with the lowest probability of severe delinquency. This Percentile illustrates where a company falls among businesses in the D&B information base, and is most effectively used to rank order portfolios from highest to lowest risk of business failure.

3. A "Score" of 101 - 670, where a 101 represents businesses that have the highest probability of severe delinquency, and a 670 represents businesses with the lowest probability of severe delinquency. This score classification enables you to use more granular cutoffs if you are using the data from the Comprehensive Report as part of a more automated decision-making process.

What does a credit score of "Zero" mean? Commercial Credit Scores are not calculated for those businesses designated as "Discontinued at This Location," "Open Bankruptcy", "Higher Risk." These records are automatically assigned a score of zero (0).

Additional Glossary Terms
  • Financial Stress Norms: Compares the company's Financial Stress National Percentile to that of firms with the same industrial classification to help you determine where the firm stands in relation to the industry norm.

  • Credit Score Norms: Compares the company's Credit Score Percentile to that of firms with similar demographic characteristics.

  • Control Date: The year the present management took control. For example, if a business was started in 1980 but was sold to new owners in 1995, the Control Date will be 1995.

  • Net Worth: The net worth of a business. "E" indicates figures are estimates provided by the owners, partners or officers of the company; "F" means figures were taken from a financial statement. This element offers another view of the company's financial size.

  • Quick Ratio: Measures the extent to which a business can cover its current liabilities with those current assets readily convertible to cash. Shows number of dollars of liquid assets available to cover each dollar of current debt. Any time the ratio is 1:1 (1.0), the business is said to be in a liquid condition. The larger the ratio, the greater the liquidity.

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