Small Business Showcase / Dun & Bradstreet

DNB DUNS Number & Small Business Credit Scoring

The DUNS number is used to identify a business registered with Dun & Bradstreet. The listing of companies with another credit bureau, such as Experian, will not be found on the D&B database since the credit bureaus each maintain unique databases and do not share data with one another.

Why Credit Scores Are Essential for Small Businesses

Most American consumers know how important maintaining a good credit score is to enhance their purchasing power and enable them to get the best mortgage rates. But if you’re an entrepreneur, you also have to work on building credit for your business. Here’s what you need to know on why your business credit score is essential and how you can strengthen it.

Why Does Business Credit Matter?

Before we look at how to get good business credit, it’s important that you understand how good credit helps your business. To grow your business, at some point you’ll likely need some form of financing. If you’ve proven that your business has good credit, your chances of getting that financing and getting it quickly go up. There’s also a good chance you’ll enjoy lower interest rates, meaning good credit will actually save you money.

Being a small business owner is hard enough. You don’t want to put yourself at a disadvantage when buying real estate, vehicles, or other key items you need to run a successful business by having poor credit.

Business Credit Vs. Personal Credit

So how do you avoid bad business credit? First of all, don’t make the mistake of thinking that business credit and personal credit are the same. While a personal credit score represents your personal financial responsibility, a business credit score reflects the health of your business’s finances. Both types of credit also have different rules.

Your personal score may come from TransUnion, Experian, and Equifax which are the three main credit bureaus. For business credit, the score could come from Dun & Bradstreet (PAYDEX score) or Experian. If you’re just starting your business, you won’t have much credit history. That’s why a credit application may ask for your personal SSN to check your personal credit. Because of this, a high personal credit score may help your business credit score.

How to Start Building Business Credit

To start building your business credit, you need what’s called a DUNS number. If you don’t have one already, you can get one free from Dun & Bradstreet. If you’re in a hurry, there is a way you can speed up the process but you’ll have to pay for it. The free process could take a month or two.

After you have your DUNS number, you’ll be ready to start up business credit accounts. The best one to begin with is Amazon Business Prime. Once you have an account, you can open an Amazon Business Prime American Express card. You’ll get 5% off purchases you make with this card on Amazon in the form of cashback. Since Amazon does have just about everything, this is a great way to buy everyday items for your business and build credit at the same time.

Something else you can do is take advantage of net-30 accounts from companies like Grainger, ULINE, and Quill. This means you’ll have 30 days to pay for items after you’ve received them. Every order you make will help you build your business credit report. You may also want to check with the vendors your business currently uses and see if they report to credit reporting agencies. Keep in mind the process isn’t instant. It will usually take 30 to 45 days for your accounts for the info to appear on your report, unless, of course, you pay Dunn and Bradstreet.

You may be tempted to start buying things to help your business credit report. Don’t! Wasting money on things you don’t need is never a good idea, and spending money you may not have will ultimately hurt, not help, your credit.

Best Practices for Boosting Your PAYDEX Score

After you’ve started some of these accounts and the information is on your report, you can go and apply for a business credit card from Shell, BP, or Exxon. It’s easy to get approved for high limits from these companies. Rather than getting as many as possible, just get one card for the company you use the most. This is an area where business credit differs from personal credit. While having many lines of personal credit can benefit you, having zero balances on business credit cards won’t benefit your business credit.

The number one indicator of healthy credit is on-time payments. So, if you want a great business credit report or you want to improve yours, this is the best way to do it. Some tips for on-time payments include:

  • Setting up auto-pay
  • Using bill pay reminders
  • Scheduling a time each week to pay bills

It’s also to your advantage to increase on your credit limit. Every three to six months, contact your lenders and ask for a credit increase.

By following these best practices, you’ll be able to increase your credit card limits and open business lines of credit at your bank. Typically, they’ll give you about 10% of your annual sales as a line of credit. This can be a huge help for your business!

Start Building Business Credit!

If you haven’t started building your business credit yet, the first step is to verify the information on your Dun & Bradstreet credit report. You may be surprised to know that a file on your business already exists even if you’re brand-new. If you spot any errors, it’s crucial that you correct them. You can look up your credit file here.

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Released in 1963 by the credit-reporting firm Dun & Bradstreet (D&B), the DUNS system is standardized across the world to help businesses establish credit, and serve as a database for important company information (e.g., company name, physical location, phone number, financial health indicators, business structure). The DUNS number is associated with your business’s credit rating, legal proceedings, payment records with vendors and other public information. DUNS numbers create a common identity for different aspects of your credit, like the D&B Paydex credit score, delinquency prediction ratings, other credit assessments, public filings (e.g., liens, judgments) and legal information.

Overall, like social security numbers, DUNS numbers can reveal a lot about your business (e.g., credit score, demographic information) and proves to suppliers, customers, contractors, vendors and other potential business partners that your business actually exists.

Disclaimer: This product or service is a sponsor or affiliate of The Steven Carlson Show and may have contributed a fixed sum to be listed as a sponsor or pay a commission on a per-sale basis.