Credit Reports

Understanding DBT (Days Beyond Terms)

It's important to point out that the Experian DBT (Days Beyond Terms) indicator is not a "score" or a "rating"; however, it's simply a numerical value that's calculated based on the principal of dollar- weighted-averaging. Easily put, DBT is the average of the number of days (past terms) a business takes to pay its suppliers.

DBT is the Most Accurate and Current Indicator of how a Business Pays

DBT is based only on tradelines that have been reported to and updated from Experian within the most recent 3 months. You can verify this by checking the dates shown in the Date Reported column of the Business Profile Report. The concept of dollar-weighted-averaging means that exceptionally large dollar balances from some tradelines may skew the DBT positively or negatively due to the heavier "weight" and impact they have as a percentage of the total Balance shown in the Trade Line Totals section of the credit report.

On the other hand, tradelines that show severely past due payment performance, yet have small dollar balances relative to the total Balance shown in the Trade Line Totals section of the credit report, will have a lesser impact on raising DBT because of the insignificant "weight" they carry.

When analyzing a report, it's always best to be aware how unusually large balance tradelines affect the DBT, particularly if the preponderance of tradelines in the report show a consistent delinquency on payments -- or a pattern of prompt payments within terms. One, or even a few, tradelines may merely represent an anomaly that's distant from how a business is really paying.

DBT Calculation

We highly recommend that you perform a few DBT calculations yourself using the formula below and actual data from a live Experian Business Profile Report. This exercise will help you develop a deeper understanding of DBT and how it may impact your credit decision process.

Tot 1 = Total dollars in aged category 1-30 days

Tot 2 = Total dollars in aged category 31 -60 days

Tot 3 = Total dollars in aged category 61-90 days

Tot 4 = Total dollars in aged category 91+ days

How Experian Tradelines Are Created

Experian tradelines originate from Balance Forward accounting practices through Data Contributors who transfer their month-end accounts receivable file to Experian on a recurring basis.
Like most businesses, these Contributors typically process multiple invoices throughout a billing period specific to each customer account. Once these invoices are totaled and consolidated into a single account line, as generally shown in a a "month-end" aging summary, a tradeline is created. There is no ability for any
company to self-report trade payment information to Experian from companies they know will report positive experiences. Further, Experian does not derive any tradelines from "trade experiences" which often represent open item invoices, that may present the illusion of more tradelines and activity than is actually the case.

One Final Thought

For the most part, DBT is the primary driver that's geared to Experian's scoring system called Intelliscore, as found on the Intelliscore Plus Report. And although DBT has a major impact on the score, the presence of legal information and collection data has even greater influence. In addition to the possibility of other derogatory data appearing on the report, the presence of this highly predictive data generally negates a lot of the positive swing that a low DBT would otherwise contribute to the score.

We hope this explanation provides further insight into using our services more successfully and with greater confidence. Please contact us if you have any questions.

We're always glad to help!