Why Your Credit Score Matters
Did you know that switching energy suppliers or missing payments can have a major impact on your credit score? Many energy firms not only conduct credit checks on customers, but they also regularly report payment history to credit reference agencies. This can boost your credit score if you pay your bills on time, but it can be detrimental if you're late or don't pay at all.
The Two Kinds of Credit Checks
There are two types of credit checks: hard checks and soft checks. Hard checks can damage your score because lenders may view multiple marks with concern. We've compiled information on the major energy suppliers, including which ones run credit checks on new customers and if they report payment history.
British Gas: Some Credit Checks and Payment History Reporting
British Gas may conduct hard credit checks for new customers, but there are exceptions. For example, if you were a recent customer, a check might not be necessary. However, British Gas does send payment history information to credit reference agencies, including whether payments are up to date or if bills have been missed.
EDF Energy: No Credit Checks but Reporting of Missed Payments
EDF Energy does not perform credit checks on residential customers. However, it does notify credit reference agencies if a customer fails to make a payment and doesn't respond to communication about resolving the issue. If the outstanding balance remains unresolved, a credit default may be applied to the customer's credit file.
E.ON Next: Hard Credit Checks and Direct Payment Performance Reporting
E.ON Next conducts hard credit checks on all new customers. These checks have minimal impact on credit scores, as long as there aren't too many within a short period. E.ON will also share the customer's payment performance directly with Equifax after they join. Timely payments have a positive impact on credit scores, while late payments are reported to Equifax in increments of months. Failure to pay the balance within two months results in a default notice.
Octopus Energy: Permission-Based Credit Data Check and Full Payment Reporting
Octopus Energy asks for customers' permission to check their credit data with TransUnion when they join. At the end of each month, Octopus shares all payment information, including both timely and late payments, with TransUnion.
Ovo Energy: Hard Credit Checks and Monthly Payment Reporting
Ovo Energy conducts hard credit checks for new customers on pay monthly plans. The supplier reports both missed and timely payments to Experian. Monthly timely payments can improve your credit rating.
Shell Energy: Hard Credit Checks and Ongoing Payment Performance Reporting
Shell Energy performs hard credit checks on customers looking to switch. Data from both Experian and TransUnion is used for these checks. If a customer fails the credit check, they may be asked to pay a security deposit. Shell Energy continues to provide payment performance data to Experian and TransUnion every month, which can impact your credit file.
Scottish Power: Hard Credit Checks and Reporting of Failed Payments
Scottish Power conducts hard credit checks on customers switching to a standard credit plan. If a customer fails to clear their balance or pay their bill, Scottish Power reports this to credit reference agencies and issues a default notice.
It's important to be aware of how your energy supplier's policies can affect your credit score. Make sure to pay your bills on time and communicate with your supplier if you're facing difficulties. Taking these steps can help maintain a positive credit history.
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