You might be familiar with personal credit scores, but did you know your business has its own credit score too? This number can play a significant role in various aspects of your operations, including the energy deals you can secure. Let’s explore what a business credit score is, how it affects your energy contracts, and what you can do to improve it.
What Is a Business Credit Score?
A business credit score is a numerical assessment of your company’s creditworthiness, typically ranging from 1 to 100. Higher scores indicate a lower risk to lenders and suppliers, suggesting that your business is more likely to meet its financial obligations on time. Credit reference agencies calculate these scores based on factors such as your company’s payment history, credit utilisation, length of credit history, and any legal filings.
How Does Your Business Credit Score Affect Energy Deals?
Energy suppliers use business credit scores to evaluate the risk of providing services to your company. A higher credit score can lead to more favourable energy deals, while a lower score might result in less advantageous terms. Here’s how your credit score can impact your energy contracts:
Access to Suppliers: A good credit score may grant you access to a broader range of energy suppliers and tariffs. Conversely, a lower score might limit your options, as some suppliers may be hesitant to offer contracts to businesses they perceive as high risk.
Pricing: Businesses with strong credit scores are often offered lower energy rates, reflecting the reduced risk for suppliers. In contrast, companies with poorer credit may face limited product options to offset the perceived risk.
Contract Terms: A solid credit score can lead to more improved contract terms. Businesses with lower scores might encounter stricter terms or shorter contract durations.
How Can You Check Your Business Credit Score?
It’s essential to know where your business stands. You can check your business credit score through major credit bureaus like Experian, Equifax, or Dun & Bradstreet. Keep in mind that accessing these reports may involve a fee, but understanding your credit position is invaluable for strategic planning.
Tips to Improve Your Business Credit Score
If your credit score isn’t where you’d like it to be, don’t worry, there are steps you can take to enhance it:
Pay Bills on Time: Consistently paying your bills promptly is one of the most effective ways to boost your credit score.
Monitor Your Credit Report: Regularly review your credit report to identify and correct any inaccuracies that could be negatively affecting your score.
Manage Credit Utilisation: Aim to use a smaller percentage of your available credit, as high utilisation can signal financial instability.
Establish a Credit History: If your business is new, consider opening credit accounts to build a history of responsible credit use.
Limit Credit Applications: Frequent applications for credit can lower your score. Apply for new credit accounts only when necessary.
In Summary
Your business credit score is more than just a number, it’s a reflection of your company’s financial health and reliability. A strong credit score can open doors to better energy deals, saving your business money and providing more favourable terms. By understanding and actively managing your credit score, you position your business for greater success and operational efficiency.
Need Assistance?
If you’re looking to secure a competitive energy deal and want to understand how your credit score plays a role, reach out to us at Ruby Energy. Our team is here to help you navigate the options and find a solution that fits your business needs. Click here to discover the Ruby Way of ‘Excellent’ customer service as rated by our over 17,500 Trustpilot reviews.
