Don’t Pay UK: What it could mean for your credit score and mortgage application
What is the Don’t Pay UK campaign?
Don’t Pay UK is a movement that's demanding a reduction of energy bills to an affordable level. They’re aiming to gather a million people to pledge not to pay their energy bills if the government goes ahead with another massive hike on 1st October.
Mass non-payment isn’t a new idea - it happened in the UK in the late 80s and 90s when more than 17 million people refused to pay the Poll Tax, helping bring down the government and reversing its harshest measures.
“We are facing an absolutely huge social crisis that will affect millions of us if we don’t act now. If the projections are true, that means 1 in 3 of us will be in fuel poverty by the winter. We cannot afford to let that happen.” - Don’t Pay UK
Is there anyone who can’t take part?
Don’t Pay UK campaigners are discouraging involvement from the 4.5 million people on prepayment meters who face self-disconnection if their credit runs out, as well as those whose energy bills are included in rent and risk eviction if bills go unpaid.
Instead, the campaign asks these people to ‘spread their message and show support’.
Is it risky?
While there are risks associated with mass non-payment, Don’t Pay UK says that risks associated with huge energy bills are much more severe than the risks associated with mass non-payment. They suggest that collectivising the risks and standing together is the best way to bargain with the government and energy companies.
In relation to the risk of having energy supplies cut off completely, Don’t Pay UK says it’ll be very difficult for energy suppliers to do so on a large scale, and energy supply disconnections for non-payments are extremely rare. This is because certain rules govern energy suppliers' behaviour in non-payment cases:
If you haven't paid your bill after 28 days, your supplier will contact you about the possibility of disconnecting your gas or electricity supply. Their first port of call will be to try to install a prepayment meter.
Before any further action can be taken, though, they must give you a chance to pay what’s owed through a payment plan.
The guidance says that if you can’t reach an agreement with your supplier on clearing your debt, they can apply to a court for a warrant to enter your home to disconnect you. If you have a smart energy meter then your supplier could be able to disconnect the supply remotely without needing to access it, but they'll first need to have visited your home to do an assessment of your personal situation and the potential impact of disconnection.
There are also concerns that if suppliers can’t get the money they’re owed, they may need to increase prices for everyone else to compensate and lead to widespread price increases.
How could it impact credit scores and future mortgage applications?
Your energy bills aren't a loan, so missing payments aren't certain to affect your credit score in the same way. But some suppliers do report missed payments to credit agencies, so in those cases it's possible that there will be consequences to your credit score. It’s important to remember that any missed payments can have an impact on your credit score and chances of getting a mortgage. It’s possible that if you refuse to pay, you may face higher rates when you want to buy or remortgage.
However, Don’t Pay UK says that we’re already in a situation in which people are having to miss bills so they can pay their rent or mortgages, so credit scores could be impacted either way.
Even one missed payment - depending on your circumstances - could bring your credit score down enough to not be able to work with certain lenders.
At Haysto, we believe that nobody should have to miss out on their dream home because of credit issues. This means that if you decide to take part in Don’t Pay UK, it doesn’t mean your future mortgage chances are doomed. But it’s important to be aware of any possible consequences of not making payments.
What can I do if I’m struggling?
If you’re worrying about the cost of living, it’s important to reach out. The first port of call should be to talk to your energy provider directly. It's unlikely they'll cut anyone off if there's been a discussion. Citizens Advice are always there to provide information and support, and information on cost of living support can be found here.
There’s a lot of conversation around the Don’t Pay UK campaign, and we completely understand how difficult and scary these times are for so many of us. But it’s really important to know how actions like these can have an impact on you long term.
Our Mortgage Experts have seen it all and aren’t judgemental. Make an enquiry to get some advice and find out your options. It only takes 60 seconds and doesn’t affect your credit score.
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