Business - Electricity Customers Feel The Heat Over Credit Scores

Company credit scores have become one of the most important hoops to jump through for companies seeking the cheapest business electricity rates and, for SMEs, this is proving to be particularly problematic.

There are tens of thousands of different business gas and electricity tariffs in the UK, with the range in price between the most expensive and the cheapest being as much as threefold. Having a company credit score that exceeds a certain minimum threshold is key to accessing the cheapest business gas and electricity rates. Currently the minimum thresholds being demanded by suppliers are currently as high as 46 out of 100 but were even higher at the peak of the recession.

However, different suppliers use different credit scoring agencies and each agency may score a company differently - often because they lack the right information about a business to provide an accurate score. To confuse matter further, companies can have sometimes have multiple entries with credit agencies because their company may, for example, have changed its status from Sole-trading to become a Ltd or they might have different sites at different locations. New businesses often have no score at all and those with no accounts declared or no history of payments can suffer heavily when it comes to their credit score - often unbeknown to them.

Those failing to reach the minimum requirements will routinely be asked by a gas and electricity supplier for a security deposit of at least £250 and sometimes up to half of their annual bill. This can run into thousands of pounds for some small businesses with heavy gas and electricity consumption such as those in the hospitality industry.

One company which fell into this trap recently was a hotel in Torquay. The owner was shopping around for the best business electricity prices and felt sure they would be available to him because of his excellent 76/100 credit score with Experian. However, the supplier with the best business electricity rates thought otherwise having used a different credit agency which had mistakenly filed a County Court Judgment against the owner. Suspicion arose when the supplier insisted that a £4k deposit be paid in advance of an anticipated annual consumption of £10k. With our help, the owner challenged the error, had it corrected and the deposit request subsequently removed. His story is not uncommon and, frustratingly, customers are often left in the dark by suppliers and have little option but to play detective with the credit score agencies to find out why they scored so poorly and with whom.

At present we estimate that a third of businesses are unable to access the cheapest rates for gas and electricity because energy suppliers are using credit scores being used to filter out the best companies to take on as customers.

Research based on constant monitoring of the sales requirements of each supplier and analysis of the credit score checks of several thousand customers. This means that for those with low or none existent scores - regardless of whether those scores are accurate or not - supplier choice is reduced when they try to compare electricity prices. For example, those who fail the credit score test are often forced to pay ‘deemed’ or out-of-contract rates which can be three times as high as the cheapest electricity and gas price.

Furthermore, even existing customers who are historically good payers are now often unknowingly credit scored by their suppliers to check them out. This means that, out of the blue, your business electricity supplier writes to informs you that it requires a £250 ’security payment’ which, if you don’t pay, your supply will be cut off. This shows how the suppliers’ broadbrush strategy of relying on credit score alone is not always the best strategy. After all the reverse could happen where a business gas customer with very high score could become a really bad payer.

Jonathan Elliott is Managing Director of Make It Cheaper, the UK’s leading independent price comparison and switching service for business electricity & business utility bills, offering massive cost savings on business electricity prices & business gas prices as well as a range of products including: insurance and telecoms.

Contacts
For interviews, images or comments contact:
Jonathan Elliot
Marketing Manager
Email: heathn@makeitcheaper.com
http://www.makeitcheaper.com
0800 970 0225