I was very surprised to learn that changing electricity providers had a negative effect on my credit score. Specifically, changing from LPE to Energy Australia lowered my score by 80 points. This also happened when I changed providers back in 2018. (Energy Australia advised it is industry standard practice to credit check new customers)
There are numerous services offering to find us (the consumer) a better deal, which includes Choice through it’s partnering with ‘Bill Hero’, but there appears to be no information around what effect changing providers has on your credit score.
I originally contacted Choice about this 20th July 2022. Melissa advised my query had been passed on to the relevant investigators.
After having no response I again made contact on 2nd August and was advised by Melissa that “The investigators who normally research this area might have some more insight, but one is away for 3 months and the other is on location at the moment.”
On the 23rd January 2023 I again made contact and Melissa advised she had forwarded my follow up and that their team would come back to me as soon as possible.
Here we are 9 months later and I have still heard nothing from Choice, so have decided to ask the wider community about their experiences.
Does anyone even realise Electricity providers perform a credit check when you join? Has anyone looked at their credit score and seen the effect the enquiry has had? If you were to join a service like Bill Hero that will “switch you again every time they find more savings”, does it concern you what negative impact it will have on your credit score despite saving you money?
Credit scores are impacted when there is a ‘hard’ inquiry. The Equifax website provides some information on this:
and
I suspect that the credit score is impacted as obtaining credit, like that which exists for electricity bills as one pays for electricity one used rather than in advance, as it can affect the ability of some consumers to take on additional credit when new credit is sought. A large number of enquires may also indicate that a consumer may have financial problems or struggle to find credit for some reason. The impact on the score affects the potential credit worthiness of some consumers.
Cheers for confirming the information I also discovered. So in relation to my question about Bill Hero, would it concern you having multiple applications for new credit (in theory up to 4 times a year) with each enquiry lowering your credit score?
If a credit report is obtained by another (non-electricity provider) business, then I expect that they will see four credit enquiries each year if one changed energy providers each quarter (noting that if the same provider was used for ongoing supply of electricity, a new credit report inquiry would not be made by the same electricity provider).
If another business did a credit report, it would show the inquires were related to electricity debit agreements and they would assess this information based in their own risk assessments. As most consumers have electricity debit agreements with their electricity provider and electricity is required in modern life, I suspect it’s impact on ability to obtain future credit would be limited. If the credit report shows a default (didn’t pay a bill on time) or a number of debt agreement inquiries around the same time indicating that a debit agreement may have been refused, then I believe that this is would have more weighting to a consumer being a higher future credit risk. Possibly this is where Choice or a credit provider such as a bank could confirm.
It’s an interesting question to ask. When we moved from Nth QLD to the SE of QLD, Ergon was our only retail choice up north, but does not service the SE of the state. Hence a different retailer. We also needed to add an LPG gas supplier, choosing different to electricity. Even our home insurer changed, to get the best deal, given the choices of provider up north can be limited due to cyclone risk. Add a new telco for mobile and another for internet, it would be interesting to know how the credit rating is affected if at all. Hence we would have had at least 5 new credit checks.
Note that other details such as time in current home, rental/mortgage/bank, and employer may also be new which may also impact. The average consumer might expect to be no less positively assessed after the move than before. Especially if the move is a positive one for employment outcomes.
