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'Hidden' credit scores harming business recovery

Make It Cheaper research has found that company credit scores are not being taken seriously by small businesses

Company credit scores are not being taken seriously by small businesses, even though they can inflate the cost of overheads by up to 30%, according to research from the price comparison service

Fewer than one in six (15.4%) business owners asked by in a recent survey knew their company credit score with one in ten (10.4%) unaware* that they even have one. When asked whether they realised that company credit scores influence the amount they are charged by some suppliers, fewer than half did with, for example, only a fifth (19.3%) aware that their score influences their business gas and electricity prices. Other overheads where company credit checks are involved include: rent, mobile phones, telecoms, merchant services and just about any form of finance.

A credit score of less than 40 out of 100 will restrict the choice of energy tariffs available to a business, with the cheapest deals reserved for those with the highest scores. Make It Cheaper estimate that 30% of businesses currently fall below the 40/100 threshold and will not only find it harder to switch energy supplier but may end up paying tariffs with a 'risk premium' included in the price or be asked to pay a 'security deposit'.**

Out of Make It Cheaper's 60,000 small business customers, engineers and manufacturers have the best credit scores with an average of 78/100 while hairdressers and restaurants typically have the worst with an average of 49. EG:

  • Engineering 78
  • Accounting 72
  • Solicitors 64
  • Farms 62
  • Hotels 59
  • Post Offices 58
  • Bakers 58
  • Butchers 57
  • Newsagents 54
  • B&Bs 50
  • Pubs 50
  • Hairdressers 49
  • Restaurants 49

Jonathan Elliott, CEO of Make It Cheaper, commented:

"Whatever your type of business, you will have a credit score that's both a reflection of how well you operate and the purchasing power you have. However there are a number of agencies that calculate scores and the information they use is not always consistent so it can be a bit of a lottery. Some, for example, will give newly-formed businesses the benefit of the doubt or use the owner's personal credit history to calculate a blended score, while others will keep a limit on a new company's score until they build up some trading history."

To confuse matters further, companies can sometimes have multiple entries with credit agencies because they may, for example, have changed status from Sole Trading to become a Limited Company or they might operate from different sites or locations.

Entrepreneur and small business advisor, Doug Richard, added:

"A credit score is just as important as the air in your tyres. Business is tough enough but it takes a whole lot more effort to get anywhere when you're running on a flat. You should know your score and know whatever's causing it to deflate so you can fix it."

* Examples of companies taking part in the research that weren't aware of having a credit score include: a Pub, Football Club, Dentist, Post Office, Boarding Kennels and an Antique Shop.

** Case Study: The Food Court at Croydon's Colonnades Leisure Park uses £30,000 of electricity a year but when its two year contract came up for renewal earlier this month, its supplier asked for three months' deposit up front - ie £7,000. Manager Waqar Ahmed contacted Make It Cheaper who found a deal with a smaller, business-only, supplier that agreed to match the price and fix it for two years but only required a one month deposit of £2,500.

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About Make It Cheaper: Based in Central London with 126 staff, Make It Cheaper has been the No.1 destination for businesses to get a better deal on their utilities since its launch in 2007. Following its acquisition of UK Power in 2012, Make It Cheaper also now provides competitive energy prices and expert advice for household energy consumers as well as businesses. Acting on behalf of all its customers with total impartiality, transparency and free-of-charge, Make It Cheaper offers deals from the widest range of energy companies including all of the 'Big 6' and over 20 of the smaller suppliers. For businesses it also offers year-on-year savings across other overheads including: telecoms, insurance and merchant services (Chip & PIN). By switching suppliers or helping to renegotiate deals with existing ones, Make It Cheaper will typically save over 30% of costs (as well as a considerable amount of time) that its customers can then spend elsewhere. Make It Cheaper was the winner of 'SME Consumer Champion' & 'Most Trusted' at the 2013 Energy Live Consultancy Awards, has been in the Sunday Times Fast Track 100 for the past two years and its 2012 Net Promoter Score was 74%.

Further Information / Case Studies: Nick Heath 0207 654 0730 /