Energy and fuel crisis

As we all brace ourselves for the uncertainty ahead, in relation to the absurd cost of our energy bills, there has been talk of some drastic action in the media world, in refusing to pay them. 

There is a new radical rebellious group gaining support mainly via social media, who claim the only way to deal with this issue , is by everyone refusing to pay their bills, and try to force energy companies into action. 

Whilst everyone in a free democracy can take such action, one very important thing to consider is what energy companies do to your personal credit files. 

We are seeing more energy companies report your repayment history with them each month, to show if you have made payments on time via the big credit agencies like Experian and Equifax, much  like loan or mortgage companies do. 

We have had recent cases at The Mortgage Shop where clients have been declined mortgages as their credit reports show late and missed payments to energy companies for their gas and electric bills . 

If people choose to join these action groups that support non-payment, it is even possible that energy companies could register defaults or county court judgements (CCJs) against you, as well as a trail of missed payments on your credit reports. These are really bad news as they stay on your credit file for 6 years and could seriously hinder you being able to remortgage or secure a new mortgage if you are thinking of moving or buying your first home. 

Most lenders use credit scoring systems and the algorithms they literally use, pick up poor credit history and we have a classic situation of 'the computer says no'. Credit scoring doesn't understand the harsh reality of why you may have missed payments, it just picks up the information and negative entries will potentially cause you an issue securing a mortgage.  

So, in summary, please consider the possible consequences of drastic action of refusing to pay energy bills in relation to your credit file implications. 

It would be far better to speak to the energy company and explain you may have difficulty in paying your bill, and they may set some repayment plan up with you to get over this problem. It could also be that they mark your credit file with an arrangement to pay indicator, which is far better than showing missed and late payments on your credit report. 

Please see our website for your free guide on credit scoring and your best ways to improve your credit rating. 

www.themortgageshop.co.uk