Energy bills and your credit score: what you need to know

Quick answer: Most energy companies don’t automatically report your payment history to credit reference agencies like Experian. So, paying your energy bills on time won’t usually affect your credit score. But if you regularly miss payments, this information is likely to be added to your credit report and could damage your score.

Most of us are paying more for our energy these days, but do your energy bills affect your credit score? It depends on your situation, so let’s break it down for you. We’ll also cover how to get help if you’re struggling to meet your energy payments.

Worried about your credit health? Check your Experian Credit Score and report to understand what information may be affecting you.

Do energy bills affect your credit score?

Energy bills don’t affect your credit score in the same way that loans or credit cards do. Most energy companies don’t automatically report your on-time payments to credit reference agencies (CRAs) like Experian, Equifax or TransUnion. So, paying your energy bills on time doesn’t usually improve your score. There are some exceptions to this though, which we cover below.

What is likely to affect your score is if you start missing energy payments.

Does not paying an electric or gas bill affect your credit?

Energy bills can have a negative impact on your score, mainly through:

• Missed payments: If you miss energy bills your supplier will contact you, and should offer help or support such as payment plans. But if you don’t respond and fall significantly behind, your supplier may report late payments or issue a default.
• Debt collection: If the debt goes unpaid, the energy company may pass it to a debt collection agency or pursue a county court judgment (CCJ).

Defaults and CCJs will stay on your credit report for up to six years and can lower your score significantly. They can make it much harder to get things like a mortgage, loan or credit card. Learn more about what affects your credit score.

Does paying energy bills help your credit score?

In general, no. But there are exceptions. A few energy companies now share monthly payment information with CRAs, which may affect your score. Check with your energy supplier if you’re not sure.

Experian Boost also allows you to instantly improve your credit score by taking into account on-time household payments.

Does energy debt or credit appear in your credit report?

Your credit report may list the energy accounts you have (or had in the past). In most cases, energy debt will only appear on your report if you miss payments, default, or the debt is passed to a debt collection agency. Learn more about who can access your credit report.

Energy credit – where you have overpaid and are owed money by your supplier – does not appear on your report. You can check your Experian Credit Report and see what information is recorded.

Does switching energy supplier affect your credit score?

Comparing energy deals won’t affect your credit score. But if you formally apply to switch, most suppliers will run a credit check. The impact on your score depends on whether they run a ‘hard’ or ‘soft’ credit check.

A soft check won’t affect your credit score at all.

A hard check will usually affect your score, but a single check will only have a small impact, and your score should quickly recover. Multiple hard checks in a short period of time can reduce your score though.

Do energy suppliers run a hard or soft credit check?

It varies by supplier. Some only do soft checks, some do hard checks. Ask if you’re not sure. A hard check may be more likely if you’re planning to pay by direct debit.

It’s important to bear in mind that a single hard credit check will have a minimal impact on your score. So, if the best energy deal for you requires a hard check, don’t be put off.

What happens if you do not pass an energy supplier credit check?

Most people do, but if you don’t pass, you will likely have other options. For example, the supplier may ask you to pay a refundable deposit instead or offer a prepayment meter .

How to protect your budget and credit score when energy bills go up

If you’re finding that managing your energy bill is tough these days, you’re not alone. But there are things you can do to help protect your budget and avoid surprise bills.

The first thing to know is how the energy price cap works.

Energy price cap explained

The energy price cap is a limit on how much energy companies can charge for each unit of gas and electricity you use. It also sets what the maximum ‘standing charge’ can be (this is the fee you pay to remain connected to the energy network).

The price cap is set by the regulator Ofgem and reviewed every three months.

It was introduced because many households weren’t switching energy suppliers , and there was concern that some firms were taking advantage and pushing up the prices of their default tariffs.

How much will I pay under the energy cap?

The price cap only limits the maximum amount companies can charge for each unit of gas and electricity. It does not cap your total bill. The more energy you use, the more you pay.

Who does the price cap apply to?

The price cap only applies to people who are on tariffs where the cost of energy can go up or down depending on the energy market. These are known as ‘standard variable tariffs’.

If you’re on a fixed tariff with your energy supplier, the cap does not apply to you.

Not switched energy tariffs in the last year or so? You may well be on a capped tariff. You can check by asking your supplier or looking at your most recent bill. Capped tariffs are usually labelled as ‘flexible’, ‘variable’, or ‘standard variable’.

Make sure your billing is accurate

To make sure your energy bills are accurate, your supplier needs to know how much energy you’re using and when. If they don’t, your supplier will estimate your usage. This could leave you paying for more than you actually use.

If you have a smart meter, it will automatically send energy readings for you. Or you can send readings manually, whatever type of meter you have. Aim to do this once a month.

Shop around for cheaper suppliers or tariffs

Use energy comparison sites to check tariffs against your own usage. Look at fixed deals, variable deals and time-of-use tariffs. A time-of-use tariff can suit you if you can move energy use to cheaper periods, such as overnight or weekends. Check for any loyalty deals with your current supplier too.

If you’re not on a fixed tariff, compare the fixed deals available to you against the current energy price cap. Remember that the price cap changes every three months, so it’s useful to check predictions from Ofgem and energy analysts of how the cap will change over the year. Though of course the further out the prediction is, the more uncertain it will be. MoneyHelper has a useful guide on whether you should fix your energy prices .

Energy saving tips

It’s possible to significantly reduce your monthly energy use with some simple, targeted habits. For example:

• Lower your thermostat by just 1°C: Aim for 18°C to 21°C
• Use your radiator valves: Adjusting your thermostatic radiator valves allows you to turn down radiators in rooms you aren’t using, saving you energy and money
• Wash clothes at 30°C: It’s cheaper and can help clothes last longer, as they’re less likely to shrink or lose colour
• Shorten showers: Sticking to four-minute showers can shave money off water and energy bills

There are plenty of simple ways to save energy. Check out the Energy Saving Trust for some quick wins that could save you hundreds of pounds a year.

Review your direct debit

Paying your energy bill by direct debit is usually cheaper than paying when you receive a bill. With direct debits, energy suppliers estimate your annual usage, then spread the cost over 12 months.

This means in summer you’ll usually build up credit as you use less energy. But you’ll need that extra credit for winter, when your energy use will shoot up.

But if the amount you’re paying seems wrong, contact your supplier. Make sure you give them regular meter readings if you don’t have a smart meter. Sometimes energy companies overestimate bills and people end up overpaying. On the other hand, you don’t want to pay too little each month either. Otherwise, you could end up owing your supplier and accidentally building up debt.

What to do if you think you will not be able to pay your bill

If you think you are going to miss a payment, help is out there. Lots of people are facing this problem, and your energy supplier has a legal obligation to assist you.

Contact your supplier

Do this first – the sooner you contact them, the better. Get in touch before missing the payment if you can. Their job is to help you, but they can only do this once they know your situation.

Your supplier must work with you to agree a payment plan you can afford. This could involve a payment break, more time to pay, or access to emergency funding.

You can find your supplier’s contact details on your bill. Or you can find your energy supplier through Ofgem’s tool.

Look for energy support schemes and grants

There are a range of support schemes and grants that you may be able to get. Some places to get help from include:

• Your energy supplier: they often have their own grants or support schemes , and can advise you on these and other options
• Your local council: many councils also have local schemes and support available
• The government: Citizens Advice has a handy overview of government support , such as the Winter Fuel Payment and Warm Home Discount

Ofgem’s help with energy bills page has useful guidance on support available from companies, government and charities.

Support managing energy debt

If you’re struggling to afford your energy bills, always contact your supplier as soon as you can. Your energy supplier has to help you work out a solution.

But as well as contacting your supplier, don’t forget there is free debt help and support available. This can be especially useful if you can’t agree a payment plan with your supplier, or you’re struggling with other debts as well.

Debt charity StepChange offers free debt advice , as does Citizens Advice . Government site MoneyHelper also has a free debt advice locator tool , which shows you where you can find free, confidential advice near you.