How Credit Scoring Effects Your Contract
When we go through the process of comparing business electricity prices for our customers, some suppliers will only offer their best rates to customers with a good credit rating. In fact any supplier offering your business an electricity contract are likely to run an online search with a credit agency to find out your score. We calculate that one in three companies are being denied the cheapest rates because they fall below the required minimum threshold.
Businesses with low or non-existent scores are forced to take uncompetitive contracts or pay out-of-contract rates which can be as much as 300% higher than the cheapest business electricity rates. This not only hurts start up businesses but is also starting to impact on those whose existing contracts are up for renewal. In some cases, businesses have approached us for help because their existing supplier has refused to continue their contract, citing a poor credit rating, even though they made regular payments.
Below are some tips on maintaining and increasing your business credit profile
1. Pay by Direct Debit Paying your bills on time is a vital part of the calculation of your credit rating.
2. Know Your Score Sometimes credit agencies get it wrong so you should check your score with them once a year to highlight any errors as they are obliged to change the report if you can prove that they have made an error.
3. Submit Your Accounts on Time Make sure that all your accounts are up to date and submitted within the correct time scales.
4. Personal Finance Sole traders and partnerships will often be accepted or refused on the credit score of the person making the application not the business name.
5. Sources of Info A lack of information on your business profile can be just as harmful as a poor credit history. Encourage suppliers who establish credit for your business to report positive information.
6. Payment History Lenders base your credit score on your payment history and the amounts of debts outstanding. If you have taken out many small loans and paid them back on time then this will stand you in good stead.