Dun & Bradstreet Rating
a score given to organizations by the Dun & Bradstreet company that rates a business's overall financial health and creditworthiness.
How the Dun & Bradstreet Rating Works
Dun & Bradstreet (DnB) is a data analytics company that works with organizations to use data in more meaningful ways. Companies contract with Dun & Bradstreet, share their business' data to be uploaded into the Dun & Bradstreet Data Cloud and receive feedback from the analytical team. Dun & Bradstreet uses several tools and scores to create a picture of a company's overall financial health. These include a PAYDEX score, a delinquency predictor score, credit limit recommendations, cyber risk scores, and the Dun & Bradstreet rating.
The Dun & Bradstreet rating uses the information on financial statements, considers assets, liabilities, and owner equity, and combines it with company size. From this, they can glean the overall picture of the financial standing of the company. Some companies will not have a Dun & Bradstreet rating or may only have a limited one because they have not provided enough/any financial information. Ratings have two parts—a designation between 5A and HH that signifies the financial strength and size of a company, followed by a number between 1 and 4 that signifies the company's risk indicator.
Dun & Bradstreet ratings impact businesses through their ability to borrow money, their ability to negotiate better payment terms with lenders, and gaining more favorable terms with suppliers. Businesses can improve their scores by working with lenders that report to credit bureaus, working directly with Dun & Bradstreet by submitting financial documentation, making sure public records are accurate, and monitoring changes in credit and related scores. The information on a Dun & Bradstreet credit report is only available for a fee.
Dun & Bradstreet Rating Example
Company A has submitted their financial information to Dun & Bradstreet so they have received a complete rating. They are assigned a rating of 3A4. They receive the first part of the rating—3A—because their net worth is $4,280,900, which falls in the $1,000,000 to $9,999,999 range. They receive the second part of their rating - 4 - because they are deemed a significant credit risk due to a history of missed payments and a significant amount of debt.
Company B has also submitted their financial information to Dun & Bradstreet. They are assigned a rating of CC2. They receive the first part of the rating - CC - because their net worth is $86,410, which falls in the $75,000 to $124,999 range. They receive the second part of their rating—2—because they are not deemed a significant credit risk, and have a good history of repayment.
Types of Dun & Bradstreet Ratings
The first part of the Dun & Bradstreet rating signifies the financial size of the company (based on financial statements):
- 5A - $50,000,000 and over
- 4A - $10,000,000 to $49,999,999
- 3A - $1,000,000 to $9,999,999
- 2A - $750,000 to $999,999
- 1A - $500,000 to $749,999
- BA - $300,000 to $499,999
- BB - $200,000 to $299,999
- CB - $125,000 to $199,999
- CC - $75,000 to $124,999
- DC - $50,000 to $74,999
- DD - $35,000 to $49,999
- EE - $20,000 to $34,999
- FF - $10,000 to $19,999
- GG - $5,000 to $9,999
- HH - up to $4,999
*Ratings for companies who have not provided financial information are based on the company's number of employees. 2R signifies 0-9 employees, and 1R signifies ten or more employees.
The second half of the Dun & Bradstreet rating is the risk indicator. It is assigned based on the creditworthiness of the company. Scores range from 1 to 4. One is the most favorable, and 4 being the riskiest investment. *If a company is rated 1R or 2R, they can only receive a rating of 2 or lower. To obtain a 1, they need to provide their financial information.