When it comes to credit scores, you’re probably familiar with the FICO® and VantageScore®. But as an entrepreneur, you’ll need to get familiar with D-U-N-S number too, which has to do with your business credit. Just like your personal credit score, your business credit report is a way for potential lenders and vendors to gauge your financial reputation. And your D-U-N-S number determines your creditworthiness.
Just how important is a business credit score? According to Fundera, 43 percent of small businesses applied for a loan last year and 36 percent were denied at least some of the funding they requested because of their credit score. In addition, 29 percent of small businesses failed because they ran out of capital. Having a solid business line of credit can help a small business in a time of crisis. Having a strong credit score can offer small business owners better terms with vendors, suppliers and lenders, which in turn will help the company’s bottom line.
To ensure you have a solid business line of credit, you’ll need to gain familiarity with the D-U-N-S number. Let's go over the basics of a D-U-N-S number and how it can help your business.
What Is a D-U-N-S Number?
A D-U-N-S number, or Data Universal Numbering System, is a nine-digit number issued by the data and analytics services provider Dun & Bradstreet, which has been in business for close to 180 years. This unique number, introduced in 1963, identifies a company's business credit file and helps lenders and business partners get an idea of your company's reliability and financial stability. Over 330 million businesses worldwide have a D-U-N-S number. This number is different from your business federal tax identification (EIN) number, which is used by the IRS for tax purposes related to your business.
The D-U-N-S number is used for business credit reporting. A company or bank can access your company's profile to determine if they want to do business with you and/or loan your business money. You, as a company owner, can also look up the D-U-N-S number of another business to guide you in a decision to work with them.
What Are the Benefits of a D-U-N-S Number?
Keeps your personal and business credit separate. When you have a number tied just to your business line of credit, you’ll be able to keep your personal and business credit separate. This separation protects your personal finances if you need to keep a large amount of debt for business purposes.
Establishes your business credit profile. By building a stronger credit history, you are more likely to attract other businesses to hire or partner with you. You may also have an easier time receiving a loan from a lender and your application may be expedited with a D-U-N-S number.
Get better terms. If you can prove your business creditworthiness to vendors and suppliers, you’ll be able to secure better terms. And better terms means you’ll be saving more money, which you can reinvest back into your business.
Allows you to do business with the government and companies outside the U.S. Many international and foreign companies, as well as U.S. government institutions, require a D-U-N-S number when submitting a bid. Having a D-U-N-S number helps potential partners and suppliers conduct a risk assessment and ensure the stability and legitimacy of a business.
Eligible for more certifications and applications. You can also apply for more business certifications than you would otherwise be eligible for without a D-U-N-S number. For instance, having a D-U-N-S speeds up the process of getting an SSL certificate for your company’s website.
How Can You Get a D-U-N-S Number?
A D-U-N-S registration is free. First, see whether a D-U-N-S number already exists for your company. You can check this by doing a D-U-N-S number lookup on the Dun & Bradstreet website.
If you don’t have one already, you can request a D-U-N-S number on the Dun & Bradstreet website. You’ll need to provide basic information about your company, such as:
Applying for a D-U-N-S number is a simple process and can be completed online. Usually, it takes up to 30 days to receive a free D-U-N-S number. Once you are assigned a number, lenders and vendors will look up your D-U-N-S number when deciding whether or not to do business with you.
5 Ways to Boost Your D-U-N-S Number
Having a D&B number, or D-U-N-S number, can help enhance your small business’ financial reputation, and in turn, its creditworthiness. It will add legitimacy to your business and highlight trustworthiness as a potential partner or supplier. After your D-U-N-S number is established, Dun & Bradstreet issues a variety of scores and ratings that signal to lenders and businesses if your company has a reliable payment history. A few steps that will help improve your score and boost your business include:
Asking vendors to report your payment history to Dun & Bradstreet. This helps illustrate your payment track record and reliability.
Not overextending your business and taking on a lot of debt. Also make sure to use your credit wisely. Taking on too much debt can affect your rating and add financial stress to your business.
Not missing any payments. Stay on top of your financial obligations and keep to a payment schedule. Payment delinquency can, and most often will, affect your rating.
Making sure your D&B file is complete and up to date. Also consider using D&B’s CreditBuilder program to help bolster your file. Costs for these programs can be as high as a few hundred dollars a month but will help build your business credit faster.
Including references in your D&B file. References are essentially reviews from a previous lender or vendor that vouches for your payment reliability.These can help demonstrate a pattern of responsible financial behavior and can boost your rating.
Keep in mind that companies are always just a few keystrokes away from viewing your D-U-N-S number and deciding on whether you’re the right company to do business with. Having a good rating will help pay dividends by giving your business access to competitive interest rates and may lead to favorable terms with lenders, suppliers and vendors.
Considering today’s turbulent markets and economic conditions — exacerbated by the effects of COVID-19 — it’s important to stay on top of your rating and help paint a solid financial picture of your business. The difference between a good rating and a bad rating may affect the terms and extent of your loan and ultimately impact the survival of your business.
Peter Mavrikis is an author and editor with over 25 years of experience in publishing. He has worked as the Editorial Director for Barron’s Educational Series, as well as Kaplan Test Prep, where he ran the test prep, foreign language, and study guide divisions. Peter has also written several books on history, exploration, science, and technology.