Does Your Business Credit Score Affect Your Energy Deal?

If you’re looking to get a good deal on your business energy, your credit score is an important factor that you may not have considered 

But how can you get the best deal for your business energy based on your credit score? and Will bad credit stop you securing a great rate for you energy?

A credit score is designed to indicate the reliability of your business’s financial status and ability to pay back loans and receive credit. Credit reference agencies will calculate your score based on a number of factors to determine your ‘risk’.  

Your business credit score and personal credit score are independent of each other but can sometimes be used together to determine things such as your eligibility for a business loan. 

Business credit scores range from 1 to 100, with anything over 80 being considered an ‘excellent’ score, and anything below 40 being considered ‘high risk’. Personal credit scores range from 0 to 999, with ‘good’ scores ranging from 881 to 960.  

Your business credit score will be calculated based on factors such as: 

• Company size: the size of your workforce  

• Business location: if your business is in an area with high levels of business liquidation or high debt, this can affect your score 

• Financial applications: their frequency and whether they were successful/unsuccessful 

• Group affiliation: if your business is part of a larger group, related entities’ score can affect your own 

• Payment history: your ability to meet payment deadlines and obligations 

• Credit history of directors: especially if your business’s directors are involved with other businesses with poor credit 

Energy suppliers buy energy in the wholesale market before selling it to customers. This means that if a business they are supplying fails to make their payments, the energy company risks losing money. 

By looking at potential customers’ business credit score, energy suppliers can assess the reliability of a customer, as well as protecting themselves. 

If a business is deemed ‘high risk’ based on their credit score, they may be refused a contract, or asked to pay a security deposit before entering a contract with a supplier. 

Just like your personal score, there are many factors that can impact your business’ credit score: 

• Purchase history: this includes any financed payments or loans you have applied for and whether you were accepted or not. 

• Size of business and length of trading period: smaller businesses or businesses that have not been trading for long may lack credit history, resulting in lower scores 

• Outstanding debt: if you have any outstanding debt, this can significantly impact your business credit score 

• Any late or missed payments: if your business has any late or missed payments on it’s record, this can be a red flag to suppliers offering you business energy based on your credit score 

If your business has a low credit score, this may affect your options when it comes to securing an energy contract. Although it will not prevent you from getting a contract altogether, it may mean that your options when finding a tariff are more limited.  

Some suppliers might refuse to supply energy to a business with a particularly poor score, whilst others may reserve their best deals for businesses with higher scores. 

Businesses with a low credit score may still be able to get a good price on their business energy if they agree to have a smart meter fitted. A smart meter offers suppliers more protection over costs, and can provide insights into your consumption, allowing suppliers to buy the right amount of energy to cover your needs. 

If your business credit score is low and you’re worried about securing an energy contract, don’t worry, there are lots of things you can do to help create good credit habits and build your score. 

• Ensure bills are paid on time: it can be easy to let bills build up, especially when you’re busy running a business. A great way to avoid accidentally paying bills late is to set up a direct debit, so your payments are always submitted on time, automatically. 

• Register your business account with a credit reference agency: credit agencies will be able to help you improve your credit score and keep up good financial habits. 

• Sign up for alerts: by regularly checking your score and signing up for alerts if anything changes, you can resolve any issues quickly. 

• Check for mistakes: it is possible for errors to occur in your credit report so it’s important to check for any discrepancies. This may include payments that have been incorrectly marked as late or missed. 

• Avoid making too many financial applications: if you have too many financial applications open at once, this can signal financial difficulties to potential lenders. 

• File your full account with HMRC and Companies House: this helps provide more detailed information about your business’s financial health and makes your credit profile easier to find for potential lenders. 

• Use tools such as score checkers and eligibility checkers before applying: this gives you a better idea of if you will be accepted for any loans or plans, as a rejection can look bad on your credit score. 

If you’re looking for ways to boost your business, whether that’s stepping up your marketing game, or finding new ways to save money on your energy bills, we can help! 

Check out our free range of expert guides designed with businesses like yours in mind!  

Whether you have a glowing credit record, or you’re working hard to improve it, we’ll take your situation into account to find the right energy solution to suit you. 

Our free quote tool makes securing an energy contract easy – in just 30 seconds, you’ll have a range of bespoke plans tailored to fit your business.