By Daniel Hunter
Company credit scores are not being taken seriously by small businesses, even though they can inflate the cost of overheads by up to 30%, according to research from the price comparison service Makeitcheaper.com.
Fewer than one in six (15.4%) business owners asked by Makeitcheaper.com in a recent survey knew their company credit score with one in ten (10.4%) unaware that they even have one.
When asked whether they realised that company credit scores influence the amount they are charged by some suppliers, fewer than half did with, for example, 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 just about any form of finance.
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 estimate 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’.
Out of Make It Cheaper’s 60,000 small business customers, engineers and manufacturers have the best credit scores with an average of 78/100 while hairdressers and restaurants typically have the worst with an average of 49.
“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," Jonathan Elliott, CEO of Make It Cheaper, commented.
"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.”
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