What Is a Duns Number and Why Is It Important to Your Business Credit?

 If you are an entrepreneur, you are probably familiar with the terms FICO and VantageScore. Every business requires a line of credit, at some point in time, for which you must get familiar with the D-U-N-S number. This unique number comes from Dun & Bradstreet, which is essentially a business credit report for potential vendors and lenders to understand the business's financial reputation. 

Continue Reading to find out what the D-U-N-S number is and why the D-U-N-S number is vital for business.

First, What Is a D-U-N-S Number?

A Data universal numbering system, commonly known as DUNS or a D&B number, is a unique nine-digit ID number issued by Dun & Bradstreet for free to businesses completing the profile. This number is important because any vendor or potential investor can look up the business's financial health, and creditworthiness.

Furthermore, businesses as well as lenders can use the information obtained from the D-U-N-S number to make a decision about whether to work with a business. This number gives other businesses and lenders an idea about how reliable and financially stable a company is.

Oftentimes, this distinction is confusing for developing entrepreneurs. They commonly assume that the company’s  D-U-N-S number is the same as its EIN (Employee Identification Number) issued by the IRS for tax purposes, which is not the case. A company's D-U-N-S number is different from the company's EIN. 

Simply put, a D-U-N-S is a unique business credit reporting number that allows banks and lenders to access your company's financial profile to determine if they want to lend money or not. Similarly, with D-U-N-S you can check other businesses' creditworthiness to make a decision to work with them in future. 

Advantages of a D-U-N-S Number

There are several benefits you get with the D-U-N-S number such as:

• Safeguarding Your Personal Credit
• Business Creditworthiness
• Flexible Terms
• Easily Grab Government Contract
• Worldwide Reorganization

Safeguarding Your Personal Credit

When you have a D-U-N-S number linked with your company’s credit profile, it will help you to keep business and personal credit separate. If you don't have a D-U-N-S number linked with the company's credit profile, you will significantly depend on personal credit for business purposes. Typically, it is not recommended to convolute business and personal credit because if you make a late payment or keep high debts in business,  it can hurt your personal credit score.

Business Creditworthiness

Building business credit is essential for every business’s success. The DUNS number is directly linked to the business’s credit profile, and you are more likely to attract potential vendors and lenders. With a strong credit history, other businesses will be more willing to work with you, it will be easier to procure a loan from lenders. Additionally, Dun & Bradstreet (D&B) plays a crucial role when a lender considers lending to your business; they generally review the credit history.

Flexible Terms

When a business has strong creditworthiness it can secure a better term with vendors and suppliers. With a D&B credit profile, you can display your business credit history to potential vendors and suppliers, and may get a chance to have better terms like net-30 or net-90 days’ terms and this will help save money which can be reinvested in the thriving business. Therefore, having a strong credit history depends upon building robust creditworthiness. One of the most efficient ways to do this is by getting a D-U-N-S number.

Easily Grab Government Contract

For companies based in both the United States and internationally, it is required to have a D-U-N-S number for government contracts. When a business has a D-U-N-S number, it helps suppliers, vendors, and partners to assess risk, calculate financial stability, and ensure the stability of a business. It is essential to have a DUNS number for business legitimacy. 

Worldwide Reorganization

Dun & Bradstreet has been in the business for over 180 years. More than 330 million businesses are tracked with this system. The D-U-N-S number is a universally recognized business reporting system - and it is recommended by more than 250 governments, trade, and organizations globally.  

How to Obtain a Duns Number?

To get a number, you can apply on the Dun & Bradstreet official website. The process includes filling out a form with questions about your contact information and why you are registering for DUNS Number. Although it is relatively easy to apply for a DUNS number,  it is recommended to seek professional support.

Furthermore, once you have applied for the D-U-N-S number, you will receive a call from D&B for further assistance, and within 30 days your unique DUNS number will be generated. 

Besides this, the most important factor to take into consideration before applying for D-U-N-S is whether you have established your business as a separate legal entity. It means your business structure falls under the category of LLC (limited liability company), S corporation, C corporation, partnership firm, or sole proprietorship.  

In The Nutshell

You are not required to have a D-U-N-S number in order to operate a business However, the numerical data obtained from this number helps build your business's creditworthiness among major stakeholders which include vendors, traditional loan institutes, and lenders. If you want a loan or additional capital from a lender or new supplies from vendors, they will likely go through your D-U-N-S number to procure financial standing and credit history about your business. Therefore, obtaining a D-U-N-S number is the first step to building and improving a credit profile.

Do you want to obtain a D-U-N-S number for your growing business?  If so you are at the right place! Black Swan Consulting has  experienced business consultants that  can help you get a D-U-N-S number and generate a strong credit history that will position your business to grow in the future.

Look no further and get connected with us today!