Credit scores/Business electricity rates

When you compare business electricity prices some suppliers will only offer their best rates to customers with a good credit rating. In fact anyone offering you any business electricity rates at all are likely to run an online search with a credit agency to find out your score. We calculate that one in three companies who compare business electricity prices are being denied the cheapest rates because they fall below the required minimum threshold - the highest being currently 46 out of 100.

Those companies with low or non-existent scores are forced to look elsewhere or pay out-of-contract rates which can be three times as high as the cheapest business electricity rates. This not only hurts innocent businesses (eg start-ups) but is also starting to impact on those whose existing contracts are up for renewal. In some cases, businesses have approached Make It Cheaper for help to compare business electricity prices because their existing supplier has refused to continue their contract, citing a poor credit rating, even though they made regular payments.

As a result we are developing a deposit service that will enable all companies to access the best business electricity rates, regardless of their credit scores. And in the meantime, here's our advice to any businesses looking to improve their score.

1. Get Listed

Credit agencies check various sources such as Companies House to confirm that your business is genuine.

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 sums outstanding have been cleared.

3. Pay On Time

Paying your bills on time is a vital part of the calculation of your credit rating.

4. Personal Finance

Credit agencies can offer the option of reviewing the personal credit profile of key individuals, particularly within smaller businesses which do not have a detailed business credit rating.

5. Keep Accounts Open

Your credit score benefits if you have credit facilities from many different lending institutions. So keep credit cards accounts open even if you no longer need.

6. Sources of Info

A lack of information on your profile can be just as harmful as a poor credit history. Encourage suppliers who establish credit for your business to report positive information.

7. 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.

8. Borrow Money

Even if your business does not need it, take a loan and pay it back early. Bizarrely, if you have never applied for a loan before then this will negatively impact on your credit score.

9. Cash is King

Some lenders offer low interest rate loans for asset purchases. Use their loans to buy cars, office equipment or machinery then use the cash in your bank to negotiate early payment discounts with suppliers. Many suppliers with poor cash flow will even offer discounts if you pay their invoices early.

10. Shop with Caution

Use a price comparison service that covers the whole market for business electricity rates to avoid shopping around for multiple quotes as multiple credit checks can leave a potentially damaging 'footprint'.