Large energy bill - best way to pay for credit rating?

jrcd92

Hi all!

It turns out my monthly direct debit for electricity has been too low for the last six months, so I've been landed with a really big lump sum bill.

I'm happy with the bill - think, on reflection, it's about right - but I'm wondering about the best way to pay it off for credit rating. I could pay it in one lump sum, but would it affect my credit rating negatively if I just upped my monthly direct debit with e-on to cover it over the next few months? I'm looking to get a mortgage as a first-time buyer (and Company Director - not a great mix, it turns out) in the summer, so the rating is really important to me as I've not really had credit until I've built up my score in the last year or two.

Thanks!

Jack

Dobbibill

Hi Jack, welcome to the forum.

This would depend on how and if the energy company is reporting to the CRAs. Check all 3.

If they are going to mark it as an arrangement to pay if you go down the increased DD route then pay it off in one. It's not worth the hassle if you are looking at a mortgage in a few months.

GingerBob_3

Yes, Eon do report their customers to the CRAs - possibly just Equifax.


I'm not sure if Eon are in the same league as British Gas and npower as far as malicious reporting is concerned - I don't think they are. Those two companies have set a very high (or is that low) bar.


To be on the safe side you should select a provider that doesn't report your account at all, e.g. EDF and maybe SSE.


Attempt to build your credit history via real credit providers, not the hangers on such as phone and utility providers.


OP, regarding your current dilemma, I suggest paying it all off in one go. Utility providers are a sneaky bunch of operators when it comes to CRA reporting and anything else could result in a black mark against you.

molerat

Providing you are staying with E.On then just let them recover the money by increasing your direct debit over the next 6 months, a nice interest free loan. After a month you will be able to go in and reduce it again and increase your interest free loan period.

All they show on Equifax is current balance and a nice green mark for paying on time. I had a £700 balance with them and paid it off monthly with no ill effects to my credit file. The only way you will get a black mark is by stopping paying.

GingerBob_3

molerat wrote: »

Providing you are staying with E.On then just let them recover the money by increasing your direct debit over the next 6 months, a nice interest free loan. After a month you will be able to go in and reduce it again and increase your interest free loan period.

All they show on Equifax is current balance and a nice green mark for paying on time. I had a £700 balance with them and paid it off monthly with no ill effects to my credit file. The only way you will get a black mark is by stopping paying.

Or by agreeing an arrangement to pay. We've had cases reported here where BG and npower have both offered this to customers without telling them it results in CRA blacklisting.

Ben8282

It is correct that e-on report only to Equifax but in my experience they don't report the actual monthly balances, just a 0. I think balances are only reported when there is a minimum contract period.
What are e-on asking you to do about this situation? Are they asking for immediate full payment or are they suggesting that the direct debit be increased?

jrcd92

Thanks all!

That's really helpful. For the record, I am with e-on for the next 9 months, so plenty of time to pay it off, but I think better to be safe than sorry - I'll pay this one off in one go, then just up my monthly DD slightly to avoid this happening again!

That's me being overcautious, but seemingly I've been stung by not having any credit rating before, having always just saved and used what I had; now I've made a good start, I don't want to risk any black marks!

Cheers :T

PixelPound

GingerBob wrote: »

Or by agreeing an arrangement to pay. We've had cases reported here where BG and npower have both offered this to customers without telling them it results in CRA blacklisting.

Different things though. Increasing DD whilst on plan should just be regular payments if you ensure it is paid off before the plan ends. In the cases of BG/npower it was where there was an outstanding bill after the plan has ended (e.g. switched) and been offered to pay off in 1 lump sum or a repayment plan.
Yes it was wrong and the suppliers should have told consumers that going on a repayment plan would have resulted in a black mark, but the OP is just changing DD amount whilst staying with EON.

However, OP, as you are planning to apply for a mortgage maybe paying it off would be better as it won't artificially increase your costs showing on your bank statements.

jrcd92

That's a great point. Thanks! Decision made, I'll pay it off on credit card, and in turn pay that off as soon as I get my statement through. Thanks all.