What Is a DUNS Number?
When you apply for credit, a lender usually asks for your social security number (SSN). Your SSN is connected to your credit report and credit scores. Your credit history determines whether a lender will extend credit to you and the terms they will offer.
Your business' Data Universal Numbering System (DUNS) number is tied to your business in the same manner as your SSN is connected. The DUNS Number consists of a 9-digit number and was created by D&B in 1963. This numbering system is used to identify all types of business organizations, including government contractors.
Your DUNS number isn't issued by a government agency; it is assigned to your business by Dun & Bradstreet. Dun & Bradstreet (D&B) is a business that specializes in business reports. One of their more noteworthy services is the collection of data for commercial credit information.
Significance of the DUNS Number
This number directly ties to a company’s credit profile as listed in D&B’s database. When you apply for business credit with a lender, you'll supply the lender with your company's DUNS number. The lender can now obtain and review your company’s business credit report and rating, as assessed by D&B.
It’s important to note that the DUNS number only identifies your business within D&B's database. While other business credit agencies exist, such as Experian and Equifax, none of these agencies share data with each other. Each agency has its own unique database, company credit report, and scoring system.
Obtaining a Number
If your business does not have a DUNS number, you can obtain one for free with a waiting period, or use a paid service for faster delivery. However, the time frame in which you receive your number through these paid services can vary. Inquire about wait times with the service you choose.
Prior to obtaining a DUNS number, check to see if your company already has one issued by conducting a DUNS Lookup. D&B has provided an easy method of looking up your DUNS as their website provides a lookup service. You can also obtain free information about your business credit file using D&B's CreditSignal.
Once you register, conduct a search to see whether or not your company has a listing in the D&B database. If you find an entry for your company, you can view your D&B Number, review and update your existing credit file, and your financial information.
What a D&B Listing Means
Although D&B has one of the world’s largest commercial databases, not all businesses have a DUNS Number. D&B collects data from thousands of sources, processes it through an internal system and creates a company file. The company then assigns a DUNS number.
Having a D&B Number does not mean your business has an established business credit report. It simply means your business has a listing with D&B. The listing can be coded as an incomplete file if no active trade lines (another term for an active credit account) are reporting. D&B refers to this as a marketing file, not a business credit report.
Once trade references get added to your file, D&B compiles the data into what they call a business credit report. It takes a minimum of three trade references for a company to generate a business credit score with D&B. This business credit score is known as the Paydex Score.
A Paydex Score is the score lenders will look at if they use D&B's credit services. Understanding the Paydex Score will help you understand your rating at D&B.
D&B's Paydex Scores range from 1 to 100. Scores of 1 to 49 are categorized as high risk for late payments, and 50 to 79 indicate moderate risk. Scores between 80 and 100 are an indication of low risk for late payments.
Other D&B Scores
D&B provides a D&B Predictor Score, predicting the possibility of suffering financial difficulties on a scale of 1 to 5 (5 being the highest chance). The Financial Stress Score (FSS) rates a business' risk of financial stress within a 12 month period. The FSS also rates on a 1 to 5 scale, with 5 being the highest chance.
The Supplier Evaluation Risk (SER) Rating is designed around suppliers and businesses in a supply chain. The SER predicts the likelihood of a supplier shutting down within 12 months, on a scale of 1 to 9 (9 is the highest risk). The Credit Limit Recommendation is simply that—a recommendation from D&B to lenders on limits for your business' credit.
The D&B Rating is an overall score based on your balance sheet and business size to provide an overall picture of your company to lenders.