When switching utility providers, your credit rating is checked to ensure you are a good risk for the new provider. This is because utility providers want to make sure you will pay your bill on time.
What is Credit Rating?
A credit rating is a number that shows how likely you are to repay a loan on time. The higher the number, the better your credit rating. A good credit rating means you're a low-risk customer who is more likely to repay a loan on time.
How Credit Rating Affects Utility Service?
You will not have any problems switching utility providers if you have a good credit rating. However, if you have a poor credit rating, the new provider may require you to pay a higher deposit or may refuse to provide service to you altogether.
There are a few things you can do to improve your credit rating, such as:
- Registering on the electoral roll
- Making all your loan and credit card repayments on time
- Keeping your debt levels low
- Not applying for too much credit in a short period
If you're considering switching utility providers, checking your credit rating first is a good idea. This will give you an idea of whether the new provider will likely accept you. You can check your credit rating for free with Noddle. Sign up and create an account.
When reviewing your credit report, look for any inaccuracies dragging down your score. If you find any, you can dispute them with the credit reference agency.
If you have a poor credit rating, options are still available. Some utility providers offer basic bank accounts that come with a prepaid card. This means you can't go into debt and can only spend what's on the card. Alternatively, you could consider a guarantor loan, where someone else agrees to repay the loan if you can't.
Do Utility Credit Checks affect My Credit Rating?
When you switch utility providers, your new provider will do a 'soft' credit check. This means they'll look at your public records, such as whether you've been bankrupt or have had any CCJs (county court judgments) against you. They won't be able to see your complete credit history, but this information is enough for them to decide whether you're a good risk.
Utility credit checks will not affect your credit rating. This is because they are known as 'soft searches,' which are only visible to you and don't appear on your credit report.
On the other hand, a 'hard search' is visible to potential lenders and can impact your credit score. Hard searches are usually carried out when you apply for a loan, credit card, or mortgage.
Final Thoughts
When you switch utility providers, your new provider will carry out a 'soft' credit check. This means they'll look at your public records, such as whether you've been bankrupt or have had any CCJs against you. They won't be able to see your complete credit history, but this information is enough for them to decide whether you're a good risk. Utility credit checks will not affect your credit rating.
If you're thinking of switching utility providers, it's better to check your credit rating first. This will give you an idea of whether the new provider will likely accept you.
