Many small business owners do not understand why they have a difficult time establishing credit for their business. They are confused when credit applications ask for their Dun & Bradstreet number. They wonder who is Dun & Bradstreet (D&B) and why would they have my number?
Dun & Bradstreet is a provider of credit information on businesses. Just as your social security number unlocks the vault to your personal financial information, a D&B number will do the same for your business. The reports are used by businesses and financial institutions seeking to extend credit to your business. Much like a personal credit report, the lender will submit updates on your payment history and terms of their agreement so that other lenders can make informed decisions about your business.
So, why would you get a D-U-N-S Number rather than continuing to use your social security number or tax identification number? It’s not because it is free because there is a fee to create a D&B credit profile. I believe this is done, not as a primary means of generating income, but because it creates a barrier to entry. Not all businesses have the cash flow to purchase the number, which means they are probably not in a position to take advantage of credit opportunities.
Dun & Bradstreet also allows businesses wishing to extend credit the opportunity to purchase reports of varying degrees about the potential client. This method of qualifying reduces the assumed risk because there is a history of the business’ ability to handle credit. Additionally, the business owner is able to separate their personal credit from the business, which could prove advantageous for businesses with high inventories or those needing to lease equipment. Tying these purchases to your personal credit will reduce your ability to make personal purchases without seeming overextended.
Mind your business and research how a D-U-N-S Number can increase your business’ credit and creditability. For more information visit www.dnb.com.
Do you have a D&B number? If not, why? If so, what has been your experience with the company?