A service-level agreement promises a number — 99.9% uptime, a four-hour response time — and service credits are what the vendor owes when it misses. They are almost always a credit, not a refund: a percentage of one month's fee applied to a later bill, capped at a modest share of that month.
Three details decide whether credits are worth anything. Whether they apply automatically or only when you file a claim within a few days of the outage. How the miss is measured (the vendor's own monitoring, with exclusions for "scheduled maintenance" and "force majeure"). And whether repeated misses give you anything beyond the credit — most SLAs say the credit is your sole and exclusive remedy.
What to do about it
Ask for credits applied automatically, a measurement method you can check, a cap of at least a full month's fee for a bad month, and a termination right if the service level is missed in two or three consecutive months. A credit against a vendor you cannot leave is a discount, not a remedy.
"Credits shall be Customer's sole and exclusive remedy for any failure to meet the Service Level, must be requested in writing within ten (10) days of the end of the month in which the failure occurred, and shall not exceed ten percent (10%) of the monthly fees for the affected service."
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Definitions and negotiation guidance here are educational business decision support, not legal advice. Consult an attorney about how any clause applies to your own agreement.