What is Business Credit     Benefits of Good Credit     Who is D & B      Archived Articles     Our Company     Contact Us     Wednesday, March 10, 2010

By now you have in your possession a copy of your current Dun & Bradstreet® Business Information Report.    If you do not have a current copy of your report, please return to the chapter in D&B® Secrets Revealed, How To Get A FREE Copy Of Your Report.  If you have not yet purchased your copy of D&B® Secrets Revealed and would like to, click here now. 

Having your report in hand, now you want to know, “… does my report qualify for financing?  Will I get approved?”  Here, I will take you through each section of your report, explain to you the different terms and scores that D&B® uses, and show you how each section should appear for you to get APPROVED for financing.  Finally, I will discuss your overall D&B® Rating, which is a composite of the various sections of your report.

Note: Paydex® is registered trademark of the Dun & Bradstreet® Cooperation.

Your final report should include the following:

• Correct information regarding ownership, time in business and number of employees, etc.
• A Paydex® score of 70 or better.  
• A percentage of payments within terms of 65% or higher.
• No collection items listed.
• No financial information included
• No Suits, Liens or Judgments listed.
• An overall D&B® Rating of 1R or 2R 2 or 3.

For quick links to each section of your report that we will be touching on you may click on any of the topics listed below.
 

There is no Report on my company or it has a DS rating

The information on my report is incorrect

Where does D&B® get their information and who is reporting on my company?

Paydex® Score

Percentage of payments within terms

Collection Items

Financial Statements

Suits, Liens, and Judgments

Your Overall D&B® Rating
 

Let’s take each topic individually.  
 

You have gone into D&B®’s database of companies and you either:

1)     Could not find your company listed.

2)      Found it but cannot get your free report because there is not enough information on the report.

3)      Found it and got your report but it has a DS Rating. 

This is not an unusual scenario for younger businesses or smaller companies that have paid cash for their purchases up to this point.  If you find yourself in this category and you are looking for financing, you may have a difficult time.  If your personal credit is good, you may be able to get approved for up to $25,000 by personally guaranteeing the debt.  Your ultimate goal should be to get approved for larger amounts of money without personally obligating yourself on the debt.  To put yourself in that position you are going to need to build a D&B® Report from scratch or deepen the limited file that currently exists.  This is not necessarily a bad thing.  You will be able to build your report with your correct information and include trade references of your choice in the file.  No “repairs” need to be made to your file.  D&B® Secrets Revealed will take you step by step through the process of building your report. If you follow the instructions in D&B® Secrets Revealed, when complete you will have a Report as described above. If you would like to order your copy of  D&B® Secrets Revealed, click here now.

The Information on my Report is Incorrect

This is not an uncommon scenario.  When you consider all of the bits of information that D&B® is trying to process, certain errors are bound to happen.  Remember, business and the information surrounding it is not static; it does not sit in time and never change.  On the contrary, look again at the statistics for changes taking place.
 

Based on our D&B®’s database activity:

In the next 60 minutes …

• 360 businesses will have a suit, lien or judgment filed against them
• 240 business addresses will change
• 150 business telephone numbers will change or be disconnected
• 112 directorship (CEO, CFO, etc.) changes will occur
• 20 corporations will fail
• 12 new businesses will open their doors
• 4 companies will change their names

So in a year…

• 20% of all addresses change
• 21% of CEO’s will change
• 18% of Telephone numbers will change   

How could D&B® keep up with all of this changing information and experience 100% accuracy?  The answer of course is, they cannot.  If your business address changes tomorrow, how would D&B® know?  If you hire (5) new employees over the course of the year, how could D&B® know to make these changes on your report?  The bottom line is this; it is your responsibility as a business owner to make sure that the information contained in your business credit report is accurate.

This can be important when applying for financing.  If you are an excavation contractor but D&B® has you listed as a computer reseller, a lender will question why a computer reseller wants to buy a backhoe.  The number of employees listed and your company’s time in business both have an effect on your overall D&B® Rating.  If this information is incorrect, it could adversely affect your ability to get approved for financing.  D&B® Secrets Revealed will show you how to make these corrections on your Report and how to avoid D&B®’s “high risk alert” list.  If you would like to order your copy of D&B® Secrets Revealed, click here now.
 

Where Does D&B® Get Their Information and Who Is Reporting on My Company?
 

D&B® gets their information from a variety of different sources and it appears in different sections of your Report.  Most of the general information including company name, address, number of employees, sales, time in business, and ownership information came from either you or someone in your company.  D&B® routinely calls companies in an attempt to update their database to make it as accurate as possible.  They will speak to anyone who will provide them with information about your company.  Often times the information they receive may not be the information you want them to have. 
 

The Corporate details on your report are obtained by D&B® directly from the various Secretaries’ of State offices across the country.  Your Report may or may not include these details, (if you are a sole proprietor or a partnership no corporate details will be included), depending if D&B® has done a full investigation on your company.  These records are updated frequently and are usually accurate.  If your report includes these details, check them to make sure they are correct.   

The information included in the suits, liens and judgments section of your Report (including the UCC filings) comes directly from state and county courthouse databases across the country.  While this information is continually updated, it is not unusual to find liens listed as open on your Report that have been released, suits listed as pending that have been settled or dismissed, or judgments listed as open that have been satisfied.  Check your report.  If you have ANY suits, liens or judgments listed on your Report, regardless of their status, click here to go to the suits, liens and judgments section below.
 

The final area where D&B® gathers information about your company is in the payment history section of your Report.  Here, the information about your payment habits is collected directly from your suppliers, vendors and lenders.  Most of the reported information comes into D&B® through their “trade tape download” program.  Here, companies agree to submit their accounts receivable records directly into D&B®’s database every month, quarter, semi-annually or annually.  This information is automatically checked and verified so that the correct information appears on the correct D&B® Report.  While D&B® does its best to ensure the accuracy of this information, there is obviously room for error.  And while millions of trade references report into D&B®, many millions more do not.  Understanding this, it is always a good idea to pay timely the companies that you know are reporting into D&B®.  But how do you know who the companies are that are reporting your payment habits into D&B®?  D&B® Secrets Revealed will show you how to get a list of these companies.  If you would like to order your copy of D&B® Secrets Revealed, click here now.

 Paydex® Score

While every section of your D&B® Report is important in calculating your overall D&B® Rating, your Paydex® score is probably the single most significant measurement on your report.  This is what lenders and suppliers first look to when considering you for a loan, lease or credit terms.  Your Paydex® score should be 65 or greater to get approved for financing. 
 

The Paydex® score is a unique, dollar-weighted indicator that provides an instant overview of how a firm has paid its bills in the past, and how the firm is likely to pay its bills in the future.  This is a very important score when it comes to being approved for credit terms or financing.  The Paydex® is a 1-100 dollar weighted numerical score of payment performance, calculated using up to 875 payment experiences from trade references reporting into D&B®.  As you can see in the Paydex® Score Key below, an 80 is considered a perfect Paydex® score.  That is, if your payment terms to a vendor are 30 days net, on the 30^th day after billing your vendor has received your check… right on time.  Any thing above an 80 means that you actually pay ahead of the due date and anything below an 80 means you pay at some amount of time past the due date.  Most Paydex® scores do not include anywhere near the 875 maximum level of trades reporting in to D&B®.  To receive a Paydex® score on your company, a minimum of 4 companies must be reporting your payment habits to D&B®.    

D&B® Paydex® Score Key:

Use this Key to help you determine the meaning of your Paydex® Score.  

     Paydex®           PAYMENT
     100                      Anticipate
      90                       Discount
      80                       Prompt
      70                       Slow to 15 Days
      60                       Slow to 22 Days
      50                       Slow to 30 Days
      40                       Slow to 60 Days
      30                       Slow to 90 Days
      20                       Slow to 120 Days
     UN                      Unavailable 

A very important aspect of the Paydex® score to understand is the weighted average.  A weighted average applies more importance to trades that are reporting a higher dollar amount of credit extended and less importance to trades that are reporting lesser dollar amounts of credit.  For instance, if (10) trades for $50 each are reporting that your company pays 60 days late but 1 trade for $10,000 reports that you  pay promptly, your Paydex® score will still be good because the (1) $10,000 trade outweighs the (10) $50 dollar trades.  This could work in reverse as well.  If (10) trades for $50 are all reporting that your company pays on time, but (1) trade for $10,000 is reporting you 60 days late, your Paydex® will be low.  To simplify, larger trades have a greater effect on raising or lowering the overall Paydex® score.  Usually a Paydex® score above a 70 represents a good score and one that most lenders and creditors are comfortable with.   D&B® Secrets Revealed will show you exactly how to raise your Paydex® score to a 70 or higher.  .  If you would like to order your copy of D&B® Secrets Revealed, click here now.

 Percentage of Payments Within Terms
 

Another very important ingredient to your getting approved for financing is your percentage of payments within terms.  The percentage of payments within terms relates to the Paydex® score.  As explained above the Paydex® score is a weighted average.  D&B® also supplies a % of payments within terms when the weight or size of the payment is not considered.  You will find this percentage on your Business Credit Report in the paragraph that describes what the Paydex® is and what it represents.  Take our example above.  There are 11 total trades reporting into D&B®.  Ten of these trades are reporting late payments and only 1 (the largest) is reporting payment within terms.  So while the Paydex® for this fictitious company may be above a 70, the percentage of payments within terms would only be 9% (11 total trades with 1 reporting on time 1/11 = 9%).  Lenders and creditors are looking for this % to be at least 60% and would like it 65% or higher.  This is an important number in your report because a lender can sometimes understand that you are having a dispute with 1 vendor or trade over billing, delivery, etc., but would have difficulty understanding why you are paying everyone late.

D&B® Secrets Revealed will show you exactly how to raise your Paydex® score to a 70 or higher and raise your percentage of payments within terms to 65% or better.  If you would like to order your copy of D&B® Secrets Revealed, click here now.

Collection Items
 

Your Report should be free of any and all collection items.   Collection items also have a negative effect on your Paydex® score.  If you have any collection items on your report you will find them at the bottom of the industry listings of the Paydex® section of your report.  They will be broken out and noted as a collection item listed “with D&B®” or with “other.”  One of the other services that Dun & Bradstreet® offers is collection service, that is, they are also a collection agency.  If the item is listed “with D&B®” that simply means that D&B® is the collection agency working for that creditor.  If the item is listed as “other” then a collection agency other then D&B® is attempting to collect this debt.  In either case a creditor somewhere has placed your account for collection and you need to clean this up. 
 

This is a good time to bring up 2 important points.  First, while a collection item may be on your report, you may indeed have a legitimate defense in why that item is there.  Let’s face it, disputes with creditors arise.  Sometimes they may be right and sometimes they may be wrong.  Just because someone places you for collection doesn’t mean you owe the money.  Second, when looking at these collection items, you need to have a willingness to resolve the matter.  The information in D&B® Secrets Revealed is not meant to manipulate D&B®’s system but instead it is designed to help you build the best business credit report to which you are entitled within D&B®’s system.  If a creditor has a legitimate collection action against your company and you just don’t want to pay, then I cannot help.  If, on the other hand, you have a solid reason for not paying and a desire to work the problem out, I can show you how to how to have the collection item removed completely from your report.  The information D&B® Secrets Revealed will show you how to do just that.  If you would like to order your copy of D&B® Secrets Revealed, click here now.

Financial Statements
 

It is my STRONG suggestion that you do not provide your financial information to Dun & Bradstreet®.  There are a number of reasons for this position.  If you would like to check out my article “The Top 5 Reasons Not to Provide Your Financial Statements to D&B®”, click here now.  If you have already made the mistake of providing your financials to D&B®, and they show a negative working capital, negative retained earnings, a negative net worth, or any losses, you will not get approved for financing.  But don’t worry, all is not lost.  D&B® Secrets Revealed will show you the exact steps you can take to have this negative information about your company removed from your D&B® Report.  If you would like to order your copy of D&B® Secrets Revealed, click here now.

Note:  If you are a publicly traded company, then your financial information is in fact public as it is submitted to the Securities Exchange Commission.  This information cannot be removed from your report.  This report manual is for sole proprietors, partnerships, or privately held corporations. 

Suits, Liens and Judgments
 

Ideally, there should be no suits, liens or judgments on your report.  However, as business moves on, there may be a time where someone files a lawsuit against your company.  A suit in itself is not bad.  People sue people over a variety of reasons.  You may be correct in defending yourself and win the suit.  At any rate, what you don’t want is a long list of suits against your company.  That would tend to indicate that there may be a problem.  And once a suit is settled or dismissed, you want it off of your report as soon as possible. 
 

Liens and judgments are different.  You don’t want any liens or judgments on your report at all… even if they are released or satisfied.  A lien is usually placed on your company for non-payment of taxes, whether it be federal, state, city or FICA.  A judgment is awarded against you in a suit because the plaintiff either proved his case or you didn’t appear to defend yourself.  Even if the lien or judgment has been satisfied, the way a lender looks at it is, “Hey, at some point in time the guy didn’t pay his taxes and a lien had to be placed on his company.”  Not good…liens don’t happen over night.  You had been given ample time and warning that a lien was going to be placed on your company and you either ignored the warnings or were financially unable to pay your taxes.  Either way you look at it a lender or creditor doesn’t get a fuzzy feeling.  That’s why you don’t want any of these items on your report. 
 

If a suit, lien or judgment has been settled, released or satisfied there is a way to have it removed form your report.  D&B® Secrets Revealed will make this secret available to you and show you exactly how to remove this negative information from your report.  If you would like to order your copy of D&B® Secrets Revealed, click here now. 

 Overall D&B® Rating
 

The final item we are going to look at is D&B®’s overall rating for your company.  You will find this at the top right hand side of your report.  If D&B® has current financials on your company you will have a rating anywhere from 5A to HH.  The 5A to HH ratings reflect your company’s size based on Net Worth or equity.  If you have supplied financials that show your company has a negative Net Worth then your company will not be rated but will have a – where a rating should be.  The second half of D&B®’s rating on your company is D&B®’s Composite Credit Appraisal.  This is a number from 1 to 4 and follows the 5A to HH rating.  The Composite Credit Appraisal reflects D&B®’s overall assessment of your company’s creditworthiness.  This assessment is based on the financial statements supplied (using financial ratios) in the report and payment history.   A 1 is the highest credit assessment you can receive and a 4 is the lowest.   

If financial statements have not been supplied to D&B® (which is our STRONG recommendation) your rating will be a 1R or 2R.  The 1 or 2 portion of this rating reflects the number of employees listed on your report. A 1 indicates (10) or more employees and a 2 indicates less than (10) employees.  The R portion of the rating means that no financials are in D&B®’s file.  After the “R” rating your company will again be assigned Composite Credit Appraisal between 2 and 4.    Since no financials are in the file this assessment is based on payment history, public filings (suits, liens and judgments), and time in business.  A 2 is the highest credit appraisal that a company not supplying financials can receive.  To receive a 2 Composite Credit Rating you usually will need to have over 10 years time in business.  A 1R3 is acceptable when looking for financing or credit terms.  

I do not offer a manual on how to raise your overall D&B® Rating because your overall rating is a cumulation and relation of all of the areas above.  D&B® Secrets Revealed will show you how to build and repair your business credit report so you can be approved for financing.  If you would like to order your copy of D&B® Secrets Revealed, click here now.

Remember: If you are not 100% satisfied with D&B® Secrets Revealed, we will refund your money in full or do the work ourselves.  You have nothing to lose and everything to gain.