Your business’s credit score plays a significant role in determining energy prices and also which energy suppliers you have access to. A better credit score means lower costs and access to a broader range of suppliers.
The reason energy suppliers use your credit score is the same reason lenders use it when you apply for a loan: to determine risk, or more specifically, how likely you are to default on your payments. It isn’t a foolproof method by any means, but it gives suppliers at least some reassurance you’ll pay them.
Your credit score
Every limited company registered with Companies House has a credit history. This is monitored by credit reporting agencies like Experian and Dun & Bradstreet. These agencies then calculate your history and give you a credit score.
In the same way, your personal credit score determines your own creditworthiness, your business credit score determines your business’s.
How this affects energy prices
The way this works is simple: the lower your credit score, the higher your rates are. New companies – those without any credit history at all or very little – are treated as if they have an average credit score with most suppliers.
The reason for the price increase is increased risk. A bad or poor credit score indicates you haven’t handled credit well in the past. Suppliers then up the rates as fair compensation for taking on that higher risk. It’s swings and roundabouts.
How this affects the choice
Just as some lenders won’t touch you if you have a low credit score, some energy suppliers won’t either. Suppliers use automated systems which have pre-set criteria for approving business energy applications. If your credit score is too low, their system will say no, and you will have fewer suppliers to choose from overall.
The usual workaround for this is to use an energy broker. A broker will usually be able to find you a more extensive range of suppliers than a simple comparison site. However, broker fees can be high, wiping out any potential savings.
The smarter workaround is to download the EnergyBillKill app. It’s free to download. All you have to do is enter your postcode and how much energy you use (or are likely to use) and we will find the best providers and plans for you. This ensures you have access to the broadest range of suppliers at the best possible prices.