How Your Credit Score Affects Your Business Energy Pricing

  1. Home
  2. Business Energy Guides
  3. How Your Credit Score Affects Your Business Energy Pricing

How Your Credit Score Affects Your Business Energy Pricing

The connection between your business credit score and energy pricing is one not to be ignored. Your business credit score will determine who your supplier is, the range of suppliers you can choose from, the type of deal you can get and even if you can invest at all. It is important you have a good credit score in order to get the cheapest offers. We explain what your credit score is, how it affects your energy pricing and what you can do to improve it.

Compare gas and electricity prices for your business

In This Guide

What is a business credit score?

Your business credit score is different from your individual one. This score is based on how likely it is you will go out of business within the next year.

Each business is rated on a scale of 1-100. Naturally, the higher your score is, the better. If you have a high rating it indicates a stronger financial position.

If your rating is 40 or more, you are likely to be able to get cheaper energy rates.

What factors affect your business credit score?

There are a lot of different things that affect your credit score. Some of these are:

    • Size of company: This is the number of people you employ
    • Payment of bills:If you have failed or struggled to keep up with bills, this will mean you have a lower credit score
    • Finance applications:This looks at the number of times you have applied for finance in the past. They look at both successful and unsuccessful applications.
    • Groups:If your business is part of a group, other businesses within this will have an impact on your credit score
    • Credit history of your company’s directors:If they are associated with successful businesses, this will have a negative impact on your credit score.

Why do energy suppliers check credit scores?

Energy suppliers check your credit score in order to secure your payment. If there is a chance your payments could default, then you will not get the best prices.

Due to the fact that energy isn’t cheap and is used in large quantities, a failure to pay would be detrimental to their business.

Some sectors are classified as being a higher risk than others. For example, restaurants often have a high turnover of management which results in uncertainty. This is a worry for suppliers.

What happens if you have a bad credit score?

Having a less than perfect credit score is not good for your business especially if it is one that is deemed as high risk. By having a bad rating, you limit your choice of suppliers and energy tariffs.

Some energy suppliers simply won’t accept businesses with a low credit score or a poor credit history. Other suppliers may just prevent you from gaining access to their best business energy deals.

However, even if an energy supplier does accept your business despite the low credit score, they may still:

  • Charge an additional premium
  • Ask for a security deposit
  • Insist you pay by Direct Debit
  • Install a prepayment meter

How to Improve Your Credit Score

  1. Pay your bills on time:This is one of the easiest ways to improve your credit score. If you fail to pay your bills on time your credit score will suffer and anything else you do will be cancelled out by the fact you are still a debt risk.
  2. Establish credit accounts with suppliers: If you work with certain suppliers consistently and build a good relationship with them, establish a credit account with them so that your positive payment experiences are shown in your credit file.
  3. Add positive payment experiences to your credit file: Not all vendors and suppliers share payment data with business credit-reporting agencies, but you can add trade references to your company’s credit file manually through the credit reporting agency. The more positive payment experiences you can add to your file, the better.
  4. Dispute any errors and inquiries: You can work with credit card companies and credit reporting agencies to get any negative feedback removed from your file. This will make sure that what is in your file is accurate and up to date so that your credit score is not suffering from what is no longer relevant.
X