With electricity and gas prices increasing steadily, it has been claimed that many Britons will find it difficult to switch energy tariffs to take advantage of a cheaper deal.

According to MoneyExpert, which owns price comparison service Simply Switch, many people are at risk of finding themselves locked into expensive tariffs as a result of a missed payment on their account. The firm explains that utility providers can halt the switching process until all outstanding debt is repaid, meaning that for 726,000 Brits who missed a gas or electricity payment in the past six months, there is a danger that they will be required to remain on an unaffordable tariff until the debt is paid off in full.

For cash-strapped consumers who need to switch supplier but cannot obtain a high street loan due to an unfavourable credit history, a bad credit loan may provide the financial lifeline to break the cycle of missed repayments and mounting debts.

MoneyExpert notes that the risk to credit ratings posed by utility bills is compounded by policies that put further pressure on the consumer. Gas and electricity companies are entitled to reclassify any outstanding payment as ‘debt’ if it is not repaid within 31 days. As a result, people may find that their credit history becomes less favourable and encounter difficulty obtaining approval for credit cards or personal loans. Furthermore, if consumers enter into a payment arrangement within this time period, suppliers have the authority to suspend a switch until the amount is paid in full.

Steve Gardner, founder of MoneyExpert, states: “Generally speaking if you have defaulted on a recent energy bill and still owe your supplier money, you will be tied into that contract until you pay up. With wholesale energy prices increasing, it’s inevitable that gas and electricity prices will rise again, so we anticipate large numbers of people to look to switch to the most competitive deals once that process begins. However, if you’ve missed a bill you won’t have that luxury and could be hit with price hikes that you just can’t avoid. The only way to release the shackles is to pay up and move on.”

For those struggling to find the funds to do this, a bad credit loan may afford them the extra cashflow needed to pay off suppliers and begin to make regular repayments with a new supplier in an effort to improve credit history. MoneyExpert explains that with rising costs of fuel and electricity, many providers are expected to raise their prices in the coming months. UK supplier Centrica, which is owned by British Gas, has recently announced that it will soon implement increased energy tariffs, fueling speculation that the average household utility bill could reach 1,300 pounds.

Such costs could prove a crippling addition to an already over-stretched household budget, the firm asserts, with 6.9 million bills recorded as going unpaid in the last six months of 2007. The group advises those who fear the effect that future price rises will have on their finances to seek help now to avoid damaging their credit ratings.

Late last month, TheEnergyShop asserted that fuel bills are likely to increase considerably over the summer months, with electricity prices expected to rise by ten per cent.

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