Credit Ratings and Business Energy


Do you know how your business’s credit rating can impact its energy bills? Many business owners are unaware of the connection, which can lead to some unpleasant surprises during the arrangement of gas or electricity contracts. With this in mind, we’ve answered a few questions about credit scores and their relation to business energy.

Why do energy providers check my credit score?

Energy is sold to businesses in large quantities, so it’s in a supplier’s best interest to check how much of a credit risk there may be with a new business customer. If that customer fails to pay their energy bills, the provider will lose out on a significant amount of money, and the process of recovering that money can be long and difficult.

What factors affect my business credit score?

Factors which have an impact on your company’s credit rating include:

    • What industry the business belongs to (some are classed as more high-risk than others)
    • Whether or not you have a history of paying bills on time
    • Whether your accounts are up to date and have been filed on time
    • How many times you’ve applied for finance
    • How many credit checks you’ve had done

 

These are the main pieces of information credit rating agencies will use to determine your score. It’s important to note, however, that they can get things wrong and your rating can suffer as a result, so you should always keep an eye on your own score. You can (and should) contact one of the top credit agencies to find out what information they have about your business, giving you the opportunity to correct any errors and fill in any gaps.

How does a bad credit rating affect my business energy bills?

Having a poor credit rating can limit your choice of energy suppliers because some of them will refuse to accept low credit businesses. If a supplier does accept your company despite a low credit score, you may be required to do one or more of the following:

    • Pay an additional premium
    • Pay a security deposit
    • Pay your bills by direct debit only
    • Have a pre-payment meter installed

 

In short, if your business has a poor credit history, you’re likely to pay more for your energy as a result.

Shopping for energy with a low credit rating

The good news is your credit score isn’t fixed so there’s plenty you can do to improve a low one. Here are a few tips:

    • Check your score regularly, making sure to fill in any information gaps and keep everything up-to-date.
    • Take care of any outstanding debts and pay all bills on time.
    • Avoid relying heavily on credit.

 

However, while you work on these improvements, your business will still require energy, so there’s a couple of things you should bear in mind when shopping for gas or electricity:

    • Compare plenty of suppliers, whether you do that through an energy broker like SwitchMyBusiness.com, or by speaking to individual suppliers. You could save yourself a lot of money and hassle by taking the time to find the supplier which will be the most accommodating in regards to your credit situation.
    • Make sure suppliers and energy brokers know about your credit rating when you’re retrieving quotes from them. If you don’t, your quote will be inaccurate and there’s a chance your application for your chosen tariff will simply be rejected later on.

 

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