Energy bill warning as switching supplier could affect credit scores – and how to avoid it

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HOUSEHOLDS are warned that their credit ratings could suffer if they seek to switch energy suppliers.

Energy companies typically perform credit checks on customers looking to switch to them.

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Households have been warned that suppliers are carrying out rigorous credit checks on incoming customersCredit: Getty

This is how they can check if you are able to pay your bills before accepting you as a new client.

It is used as a way to protect them from the risk of paying customers’ bills missing payments.

There are two kinds of credit checks – Hard ones leave fingerprints on your file, while soft ones don’t.

Firm checks can damage your score – Lenders might see a lot of marks with concern, and might even deny your credit application.

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But as many households are slammed by a cost-of-living crisis and fall behind on their bills, experts have warned those looking to change could see their credit ratings take a further hit.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: ‘A rigorous credit check will affect your credit score and make it harder to borrow, which adds insult to injury for struggling households.’

She cautioned households against switching if they are looking to move up the property ladder quickly.

“It can also be more difficult to qualify for a mortgage if you have a lot of recent bad checks,” she said.

“Rising house prices and mortgage rates have already made getting a mortgage quite difficult, so if you’re considering remortgaging, it may be worth switching energy companies until you’ve made a deal.”

While AJ Bell’s personal finance manager, Laura Suter, said households should be wary of making “a lot of requests from different providers in a short period of time”.

This is because it could be seen as a “red flag” for lenders.

Which energy suppliers perform rigorous credit checks?

The Sun asked major energy suppliers what their policy was on rigorous credit checks on customers.

EDF said it would not do any credit checks on customers looking to trade there – but others do.

Shell Energy will carry out a thorough credit check on any customer wishing to switch, as well as British Gas.

Bulb will run one on each client when you’ve accepted your new offer and started the switchover process.

Scottish Power will carry out a rigorous credit check on customers who wish to switch to them on a cash payment plan – where you pay for the energy you have used on a monthly basis.

Octopus, Eon, Ovo Energy and Utilita did not respond to questions from The Sun at press time.

Do energy companies perform rigorous credit checks in other situations?

Yes – some providers will perform a rigorous credit check on outgoing customers looking to leave a prepaid meter.

This includes British Gas and Scottish Power.

Again, this will leave a mark on your credit file – too many marks can hurt your credit score.

If you have bad credit and are looking to change, you may be asked to spit out a deposit worth hundreds of pounds.

Suppliers may charge a security deposit to customers wishing switch to them if they’re worried, maybe they’re not able to pay the payments.

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A Sun drive was charged £470 by Ovo Energy to move – and then struggled to afford adequate food.

Shell Energy said it also charged security deposits, ranging from £150 to £300.

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