Will The Don’t Pay UK Campaign Damage My Credit Score?
Analysts are advising that they predict the energy cap to rise to £3,582 for a typical household in the UK come October and rise yet again to £4,266 in January and £4,426 come April. With such dramatic rises in our energy costs, a campaign called Don’t Pay UK is urging people to stop paying their energy bills should it receive at least 1 million signatures by October.
The movement says it takes its inspiration from a similar campaign against the poll tax back in the 80s/ early 90s. To date, around 100,000 signatures have been gathered since the group was formed around 6 weeks ago.
Action must be taken to assist those that are in the most need and whilst we offer no opinion of those that support the above movement we thought it would be helpful to give you an insight to what impact non- payment of your energy bills may have as it could adversely affect your credit.
Will it be recorded on my credit file?
It’s likely that as with any missed or late payment, it will be recorded on your credit file and in turn have an impact on your credit rating. Depending on the period of any missed payments you could find that a default or CCJ is registered against your name giving rise to even further consequences. Whilst a large movement such as the Don’t Pay UK is unknown territory, we see no evidence at this time to suggest that energy companies will give any special dispensation to people’s credit files for non payment. If you have a default or CCJ against your name it is unlikely that you will be able to secure and a mortgage at standard interest rates if at all.
Will it stop me getting a mortgage?
If you stop paying your energy bill and this is recorded on your credit file, then there is a good possibility it will have an impact on any future applications for credit or a loan that includes a mortgage. It is not a given, as much will depend on your overall perceived risk however it’s unlikely that lenders will give any different treatment simply due to the current circumstances. Depending on your overall credit profile, it could stop you getting a mortgage or at the very least mean a much higher probability of not being able to secure the best interest rate available. Of course, if you are still fortunate enough to get a mortgage but find it has to be at a higher rate due to your credit situation, this may end up costing you much more in the long run.
Can I cancel my energy payment direct debit?
If you decide to cancel your direct debit, the charity Citizens Advice UK is offering words of warning. It advises that paying by direct debit is usually the cheapest method to make your payment and the first course of action typically taken by energy companies should a customer’s direct debit be cancelled is to switch them to a pre-payment meter. This, they have stated, is often the most expensive means of paying. Ultimately, albeit it is very rare, non payment could end up with a customer’s supply being cut off.
In such unprecedented circumstances it is difficult to advise what impact your actions, should you stop paying your energy supplier, would definitely have and as such we simply recommend that you carry out all your required research before acting on any plans so you have as much understanding of any future implication this may have on your credit. Please consider the repercussions carefully before you stop paying your bills.