Fewer than one in six (15.4%) business owners know their company credit score, while around one in ten (10.4%) are unaware they even have one, a recent survey conducted by makeitcheaper.com found out.
When asked whether they realised that company credit scores influence the amount they are charged by some suppliers, fewer than half did, with 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 finance.
The energy broker has warned that 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 estimates 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.
Of Make It Cheaper’s 60,000 small business customers, pubs and restaurants have some of the worst credit scores with an average score of 50 and 49 respectively, compared to engineers and manufacturers who have the best credit scores with an average of 78.
Make It Cheaper chief executive Jonathan Elliott said: “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.”
Doug Richard, entrepreneur and small business advisor, 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.”