This article will outline the three ways your credit score will affect your business energy tariff. But before we do that, let’s lay down the basics regarding energy tariffs.
What Are Energy Tariffs?
There are two main types of energy tariffs: standard variable tariffs and fixed-rate tariffs.
Standard variable tariffs are the most common type of energy tariff. This is where your energy price can go up or down, depending on the wholesale energy market.
Fixed-rate tariffs offer you protection from rising energy prices. This is because the price you pay per unit of energy is fixed for a set time, usually between one and three years.
Energy suppliers are required to offer their customers a standard variable tariff. However, you may be able to switch to a different type of tariff that better suits your needs.
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What’s A Standard Variable Tariff?
A standard variable tariff (SVT) is the most common type of energy tariff. This is where your energy price can go up or down, depending on the wholesale energy market. Your supplier must offer you an SVT if you don’t choose another type of tariff.
If you’re on an SVT, you could save money by switching to a fixed rate tariff. With a fixed-rate tariff, the price you pay per unit of energy is fixed for a set period. This offers protection from rising energy prices.
The length of time that your tariff is fixed will depend on the supplier and the type of tariff. But it’s usually between one and three years.
Once the fixed period ends, you will automatically be moved onto the supplier’s standard variable tariff. This means that your energy price could go up or down. If you don’t want to be on an SVT, you should switch to another type of tariff before your fixed period ends.
What’s A Fixed-Rate Tariff?
A fixed-rate tariff offers you protection from rising energy prices. This is because the price you pay per unit of energy is fixed for a set period, usually between one and three years.
Once the fixed period ends, you will automatically be moved onto the supplier’s standard variable tariff. This means that your energy price could go up or down.
If you’re on a fixed rate tariff and prices rise, you will still pay the same amount per unit of energy. This could save you money if energy prices go up. However, if energy prices fall, you may pay more than you would if you were on an SVT.
When choosing a fixed-rate tariff, it’s essential to compare the price per unit of energy with the current SVT rate. This will give you an idea of how much you could save if energy prices go up.
In addition, it’s also essential to check the length of the fixed period and any early exit fees. For example, some suppliers may charge you a fee if you want to switch to another tariff before the fixed period.
What Is A Business Credit Score?
A business credit score is a numerical representation of your business’s creditworthiness. Companies with higher credit scores are more likely to repay their debts, and as such, they often receive better interest rates and terms from lenders.
Conversely, businesses with lower credit scores are seen as being riskier, and as such, they may be required to pay higher interest rates and deposits.
Your business’s credit score is based on several factors, including your payment history, the amount of debt you have, and the length of time your company has been operating.
3 Ways Your Business Credit Score Affects Your Business Energy Tariff?
Your business credit score can affect your business energy tariff in these ways:
- If you have a poor credit score, you may be required to pay a higher deposit for your energy service. This is because energy suppliers see businesses with poor credit scores as more likely to default on their payments.
- A poor credit score may also result in you being charged a higher interest rate on your energy bill. This is because businesses with poor credit scores are seen as more risky customers.
- If you have a poor credit score, you may find it more difficult to switch energy suppliers.