Yorkshire Water has confirmed that it is to start reporting its customers’ payment history to one of the main UK credit agencies.
It will become the first water supplier to start reporting all customer accounts to a UK credit agency and the decision will affect 5 million customers. The change was announced just after Yorkshire Water raised its prices by 7.7% for those on water meters and by 3.5% for those without.
For those customers who have missed payments in the past, or who are currently in arrears this could be a real blow, as a record of missed payments or arrears could lead to a lower Credit Score and will make it harder to obtain the credit in the future.
On the flipside, the vast majority of customers, who make all payments on time, could see a small improvement in their Credit Score.
Yorkshire Water will now be able to access your Credit Report before opening a new account. Yorkshire Water says this is to ensure that this is to enable it to "tailor" the service provided to the individual customer and to "reduce the likelihood and level of bad debt in the water industry".
There are fears that this will mean more stringent conditions of supply are placed on those who are already facing financial difficulties.
Jonathan Harding of Yorkshire Water says, “With increased financial strain on households, there is an increasing need for us to understand and gain insight into those customers who are facing financial hardship.”
It is estimated that writing off bad debts cost the water industry £329m in 2010/11.
Do other utilities show?
This move follows a number of energy and communications companies who have started reporting the equivalent of ‘defaults’ to the credit agencies. Some water companies already report to the credit agencies, but only where there have been a number of missed payments, as they do not have the consent of their customers to forward payment performance. In the absence of consent, which presumably Yorkshire Water is obtaining routinely to enable it to break the mould, t is only when the customer relationship breaks down, and the ‘customer’ is reclassified as a ‘debtor’, that it is lawfully possible to give details of accounts to the credit reference agencies.
In our experience, from helping thousands of consumers with their credit files, where a large supplier first starts reporting to the credit agencies there are often teething problems and incorrect entries can sometimes be lodged against innocent consumers credit files.
This is a real problem with utility companies, where often the full name of the customer is not known. Another situation arises where a consumer leaves a property and the next tenant reopens an account in the name of the outgoing resident. The subsequent arrears can then be wrongly attributed and this has a serious effect on Credit Scores.
How can I check what's reported?
If you believe you may be affected, it may well be worth keeping a closer eye on your Credit Report to ensure that everything goes smoothly. You can see everything a potential lender would with checkmyfile - including data from three Credit Reference Agencies. It's free for 30 days, then just £14.99 a month, which you can cancel easily online at any time.
If you should discover anything untoward, please don't hesitate to get in touch and our credit analysts will be happy to help you further.
In the meantime it may be worth adjusting your priorities where money is tight, ensuring payments are made on time with your water bill may make it easier to obtain credit in the future when it is really needed.