Having a high personal credit score grants you access to more favourable loans, credit cards, better housing options, and much more. Then there are business credit scores, which indicate the probability of your company going out of business within the next year.
You may not know this already, but your business credit score can have a real impact on the cost of your energy bills. A bad credit score can make it difficult for you to negotiate tariff types and unit prices with suppliers
If a supplier deems a customer to have poor credit, they can decline the contract that has been signed by the customer. In this case, the business would need to find an alternative supplier that will accept their credit score.
In this post, we cover the basics of business credit scores, how to improve them, and how they affect your business energy contracts.
What is a business credit score?
A business credit score rates how your business is performing from a financial standpoint. The factors that make up your credit score include:
- The size of your company.
- The number of employees in your company.
- Your timeliness in paying bills.
- Your successful and unsuccessful finance applications.
- The credit history of your company directors.
Credit ratings are scored on a scale of 1–100. The higher your score, the better you are judged to be in a stronger financial position. A minimum score of 40 or more generally will get you cheaper deals on energy contracts.
A lower credit rating can limit your options when switching business energy suppliers. There are some energy suppliers that will not accept businesses with low credit scores at worst, and offer limited tariff options as best.
Energy suppliers may accept low credit scoring businesses with certain conditions in play, such as charging your business an additional premium, requesting a security deposit, charging your business by direct debit, or installing a prepayment meter on your site.
Ways to improve your business credit score
There are steps you can take to improve your credit score:
- Paying your bills on time is one of the easiest ways to boost your score.
- Establish credit accounts with your regular suppliers and vendors. Positive payments in these accounts will show on your credit file.
- Ensure too that your suppliers and vendors are reporting your credit to credit reporting agencies. Not all entities do this, so either look for new partnerships who do report payment histories or work with your current ones to get this started.
- Errors and omissions occur in any documentation work, and business credit reports are no exception. Regularly monitor your credit reports to better catch any discrepancies or issues.
Get quotes and switch suppliers today, no matter your credit score standing
Whether your business is in good credit standing or you are working hard to improve it, you have the opportunity to save money and get a better business energy deal that suits and satisfies your needs.
BusinessEnergyQuotes.com lets you compare energy quotes from over 20 of the UK’s best energy suppliers in seconds, and within just three minutes, you could be signing for your next business energy deal, 100 per cent online.
Looking for tailored advice and a bespoke energy plan? Contact the agents at Northern Gas and Power, who has built one of the largest, most dependable networks in the utilities sector. Call today on +44 (0)3 300 300 800.