In the past, signing up with an energy supplier didn’t require a credit check, but now, many suppliers have introduced this step before taking on new customers. As a Switchd member, we've put together a helpful article to guide you through everything you need to know.
The article will cover:
Why do energy suppliers check my credit rating?
Energy suppliers are conducting credit checks to assess the risk level of potential customers before entering into a contract. This process helps ensure that customers are likely to make their payments on time, protecting suppliers from financial risk. When you join a new supplier, they’ll typically send your information to credit reference agencies to review your credit report.
Additionally, some suppliers may perform a check to confirm your identity and verify that you live at the property where the energy will be supplied, helping to prevent fraud.
Will it be a 'hard' or 'soft' check?
Credit checks come in two forms: hard and soft. A hard credit check might slightly lower your credit score and will appear on your credit history for two years. On the other hand, a soft credit check does not impact your credit score and usually isn’t recorded on your credit history. Most energy suppliers will perform a hard credit check.
What happens if I don’t pass the credit check?
If you don’t pass the credit check, you’ll typically be notified right away. We'll also send you an email to inform you. This doesn’t mean you won’t be able to sign up as a customer. Instead, the supplier may ask for a security deposit, which varies depending on your annual usage and monthly Direct Debit amount. This deposit is separate and will be returned to you when you switch suppliers, unless it’s needed to cover any remaining balance.
Which suppliers perform credit checks?
British Gas: Conducts a hard credit check for some new customers, but not for recent former customers. British Gas shares payment history with all three major credit reference agencies.
E.on Next: Performs a hard credit check on all new customers. The impact on your credit score is minimal unless you have multiple hard checks in a short period. They report payment information directly to Equifax.
Octopus Energy: Requests permission to check credit data with TransUnion and shares your monthly payment information with them.
Ovo Energy: Conducts a hard credit check for all new customers signing up for a monthly Direct Debit tariff. They report both timely and late payments to Experian.
Scottish Power: Runs a hard credit check for customers switching to their Standard Variable tariff. Late payments are reported to credit reference agencies, and a default notice may be issued.
Ecotricity: Performs a credit check with Equifax. If your score is low, they may request additional information before proceeding.
Sainsbury’s Energy: Conducts a credit check when you move into a new property or take responsibility for energy supplied by them.
What if I have a prepayment meter?
Prepayment meters work a bit differently, as you top up your energy either through an app or at a local shop. If you currently use a prepayment meter, your new supplier will not carry out a credit check. However, if you choose to switch from a prepayment meter to a credit meter, some suppliers, including those mentioned above, will need to perform a credit check first.
What if I prefer not to undergo a credit check?
Many suppliers still don’t require credit checks, so if you're not comfortable proceeding, not to worry. You can let us know by logging into your Switchd dashboard. In the 'Switchd settings' section, you can adjust the toggle button to inform us of your preference.
