D&B's Commercial Credit Score: Business Definition

Business Definition for: D&B's Commercial Credit Score

D&B's Commercial Credit Score

What is the Commercial Credit Score?
What influences my Commercial Credit Score?
Who uses the Commercial Credit Score and for what purposes?
How can I improve my Commercial Credit Score?

What is the Commercial Credit Score?

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.

How does D&B define severe delinquency?

D&B created its Commercial Credit scoring system to predict the likelihood that a company will pay its bills in a severely delinquent manner based on the definition that:

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.

What is the Commercial Credit Scoring System?

The Commercial Credit scoring model is 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.

The Commercial Credit Score uses statistical probabilities to classify companies into three risk classifications, which provide different views of the same underlying data:

A Class: The best choice for an at-a-glance risk assessment.The Class system segments the businesses in the D&B database into five distinct risk groups. The class indicates that this firm shares some of the same business and financial characteristics of other companies with this classification. It does not mean the firm will necessarily experience severe delinquency in payment. Class Scale: 1 to 5: (1 = Lowest Risk, 5 = highest risk)
A Percentile: A granular view providing a more specific classification of risk. The percentile shows you where a company falls among businesses in the D&B information base, and is most effectively used to rank order a portfolio from highest to lowest risk of sever delinquency in payment. Percentile Scale: 1 to 100: (1 = Highest Risk, 100 = Lowest risk)

A Score: The most granular view providing a more specific classification of risk. The score provides a direct relationship between the score and the level of risk and enables more granular cutoffs typically used in a more automated decision-making process. Score Scale: 101 to 607: (101 = Highest Risk, 607 = Lowest isk)

Credit Score Class	% of businesses within this Credit Score Class	Credit Score Percentile	Commercial Credit Score
1	10%	91-100	536-670
2	20%	71-90	493-535
3	40%	31-70	423-492
4	20%	11-30	376-422
5	10%	1-10	101-375

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).

What are Risk Categories?

Risk categories were created to make it easier to translate the Commercial Credit Score Class into understandable risk groups:

Classes 1-2:	Low risk of severe delinquency
Class 3:	Moderate risk of severe delinquency
Classes 4-5:	High risk of severe delinquency

Based on changes to your underlying percentile scores, D&B takes a proactive approach to notify you when a change in your score is bringing you closer to a different risk category.

As an example, if your Commercial Credit percentile score declined from 50 to 40, you would receive a message within your alert that you are approaching a High risk category (Class 4 or 5). That is, another significant decline in percentile score (from 40 to 30) would already categorize you as high risk.
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What influences my Commercial Credit Score?

Your Commercial Credit Score reflects past payment performance, demographic and financial information, and outstanding suits and liens.

Here are some of the elements used in creating the Commercial Credit Score: Payment Behavior

Number of payment experiences
Payment experiences past due (31-60 days & 61-90 days)
Negative payment experiences
Satisfactory payment experiences

Demographics

Company type (i.e. corporation)
Ownership of facility
Total number of employees
Years since last management change

Public Records

Number and dollar amount of suits, liens, judgments
Total number of UCC filings

Financials

Age and existence of balance sheets
Current ratio/Quick ratio
Negative or low net worth

Who uses the Commercial Credit Score and for what purposes?

Suppliers, banks, lessors, landlords, and customers all use the Commercial Credit Score for various reasons including:

Determining whether to accept a sale, set credit terms or reject an account.
Assessing whether you pay delinquently or not at all.
Deciding if your account should be forwarded for 3rd party collection.
Considering you as a stable supplier.

How can I improve my Commercial Credit Score?

You can improve your Commercial Credit Score by addressing those areas of your business that most influence the score. Here are some steps you can take:

Review your D&B report and make sure it is complete and up to date with the most current and accurate information:

To update general information and company financials, please go to https://eupdate.dnb.com/
If you have questions about your report, please call us at 1-800-234-DUNS (3867).

Make every effort to pay your bills on time – your payment behavior has great influence on your score.
Add more payment experiences to your D&B credit file - to learn how, please call a D&B Customer Service representative at 1-800-234-DUNS (3867).
To the extent possible, quickly resolve open legal matters (i.e. suits and liens).
Improve your financials by:
1. Improving cash flow and cash on hand
2. Collecting payments from customers on time
3. Improve working capital
4. Increase your net worth