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Do credit scores affect business energy prices?

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Business energy suppliers will check a limited company’s credit score. This provides reassurance that your business is legitimate and assesses the financial risk of supplying you.

Like your personal credit score, a business is rated on a scale. If your business has been struggling or has missed and late payments, your score will not be very high. Start-ups will also have a low score as lenders will have limited to no information to base any decision on.

Do not worry. There are plenty of business energy suppliers available for buinesses with limited credit. Read on for more information on this. 

A business credit score is between 1 and 100. The lower the number, the least creditworthy your business is. You can check your business credit score with Experian. They offer an initial three-month trial period rising to £24.99+ VAT per month.

What happens if your business has a bad credit score?

The bottom line is that having bad credit does not affect your businesses ability to switch energy supplier. However, you will be restricted and will not get access to the best deals.

Here are some challenges that businesses with a lower credit score may face:

  • Access to a smaller amount of business energy deals. Prices may change or be withdrawn if you are deemed a higher risk.
  • You will have access to a smaller number of business energy suppliers.
  • Business energy prices may be higher.

It’s not all bad news. Many other factors come in to play in addition to business credit scores. Business energy prices are based on the size of your business, the industry, annual consumption and many other considerations.

Business energy suppliers often take your Standard Industrial Classification (SIC) number into consideration. This assesses a large amount of statistical and economic data. SIC classifies some sectors as higher risks than others. The more uncertainty surrounding the industry, the more cautious suppliers will be.

Is it possible to improve my businesses credit score?

There is no ‘silver bullet’ to increasing your business credit score. It also takes time. It can take up to 6 months to move the needle from bad to average.

There are a few good practices that will help you on the way to improving your score:

Consider taking out a business credit card and use it responsibly.

Using a credits card for everyday business purchases and paying them off on time is a great way to quickly start improving your businesses credit score.

Pay invoices on time.

Making sure that your accounts department pay any invoices on time will have a huge impact on the businesses credit score. This can be a busy department but it’s worth making sure that it is running efficiently.

Limit credit applications.

Like with personal credit score, applying for credit regularly can put a dent in the businesses credit score. Limiting the number of applications should help.

Ensure all your records are correct with the credit referencing agency.

It is worth checking that all the information on your businesses credit file is correct and up to date. A missed payment that may be incorrect could be affecting your score without realising. If this is the case, you should dispute anything irregular on your file.

This is not financial advice to increase your business credit score. These are simple changes your business should consider that are likely to increase your overall score.

It’s important to note the business energy suppliers may check personal credit scores in cases where the business is a start-up to provide them with a complete picture.

Is switching business energy with a bad credit score worth it?

Every business no matter their credit score should regularly compare business energy prices. No matter what deals your business has access to, you will likely still be able to save money.

Our expert energy team can advise you on the best deals and suppliers available to business with bad credit ratings. We have helped thousands of businesses save millions on their energy bills. You can compare business energy prices here.

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