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Do providers require a credit check for gas and electricity connections?

Do providers require a credit check for gas and electricity connections?

When you sign a contract with an energy provider, you commit to paying any charges you incur for using electricity or gas, or both. Preferably, you’d choose an energy provider after comparing the tariffs and other charges of multiple providers and finding one that suits your needs. 

If you still find your energy bill unaffordable and can’t pay it in full by the due date, it may be reported as a default to the credit reporting agencies. Most energy retailers don’t want to take the chance that you’ll default on your bills and prefer to conduct a credit check before agreeing to offer you an energy plan. However, they operate under strict privacy rules, so you’ll have to permit them to access your credit report when signing up with them.

How does my credit score affect my energy connection?

Whenever you take on or repay debt in any form in Australia, the lender reports this to one or more of the three credit reporting bureaus. For instance, if you apply for a home loan or a credit card and your application is rejected, your credit score may be affected negatively. Other things that may be reported to credit reporting agencies and negatively impact your credit score is failing to pay your bills on time.

Energy retailers may request access to your credit report to obtain information about any previous utilities’ connections you may have had. If you’ve ever missed paying any past bill or even paid one after the due date, this may be reflected in your credit report. Usually, a utility provider reports a payment default to the credit bureau only if they cannot contact you over a long period after you’ve missed paying a bill. 

If you have any issues paying your energy bills, you may be able to avoid it being reported to the credit bureau if you have a reasonable explanation, such as financial hardship. You should, however, discuss your situation with the energy provider. They may offer bill smoothing arrangements, which allow you to pay the amount due in smaller or more affordable instalments. 

Another concern you may have is that if you have poor credit, an energy retailer may refuse to offer you a contract; this may not be the case.  If the retailer has been supplying energy to the previous occupants of your property or if they’re the only supplier, they may consider your connection request. However, if they consider you a credit risk, and there are other suppliers, they may not consider your application for a market offer. Note that energy providers whose plans include standing offer contracts can’t deny customers such a contract.

You can check your credit report periodically to make sure that the information accurately reflects your current credit status. This will avoid getting surprised by an energy retailer refusing you a market offer or only offering you a basic plan. 

Do any energy providers offer electricity and gas connections with no credit checks?

Most energy retailers don’t offer a new gas or electricity connection without a no credit check. However, if you’re simply switching plans or transferring a connection to a new address, they probably won’t check your credit report. 

Essentially, they may only check your credit score at the time of application but not at any time afterwards. To save any future checks on your credit if you’re planning to move, you may want to determine whether your energy retailer also supplies energy to your new area. You may be able to continue your energy and gas service with your current supplier under your account, but to a new address.

Before applying for a new connection, however, you may want to check your credit score and take any necessary corrective steps. If you don’t think you could get the best deal with your credit score, you could ask someone else living at the same address with a better credit profile to apply for the connection.

If you have an average or poor credit score and are unsure whether an energy retailer would accept your application you can check the product information documents. These documents are often available online, where you can check their policy on credit score requirements to understand your chances of getting a contract. While they may not specify the exact credit score range, they can offer guidance on the steps you can take to work around any creditworthiness issues. 

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This article was reviewed by Kate Cowling before it was published as part of RateCity's Fact Check process.

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