Nearly a quarter (24%) of British households say they will take out a new financial product – such as a credit card – in order to help cover the cost of Christmas. With one in five (21%) already worrying about festive expenses, it makes sense to start planning for such products now.
While common methods of choosing credit cards such as price comparison websites and trusted news articles yield a 70% and 23% respe
While common methods of choosing credit cards such as price comparison websites and trusted news articles are turned to by 70% and 23% Brits, only 23% will check their credit score. To further compound this issue, less than half (45%) of card-carrying Brits have checked their score in the last year and 30% have never checked it at all.
To really reduce the cost of Christmas borrowing, Brits should be taking steps now to boost their credit scores, rather than waiting until it is too late. Unfortunately, such pre-emptive action is unlikely with 42% of people not knowing that their credit score can affect how much credit card interest they will pay, according to new research from ClearScore.
Your credit score is one of the most important numbers you have as a poor score will limit your ability to access the best financial products. Someone with a ‘low’ score could end up paying £20,000 more in interest repayments across a lifetime when compared to someone with an ‘excellent’ score. This figure is almost equivalent to a year’s annual take-home salary! 2
Nonetheless, 44% still don’t realise their credit scores affect their changes of being accepted for a credit card and only 42% know the interest rate they’re offered is also impacted by their financial history. This short video produced by the BBC illustrates the extent of the unfamiliarity of most Brits with their credit scores. 34% of Brits cite not wanting to pay for access as the primary reason for not checking their scores.
Justin Basini, CEO of free credit checking service ClearScore, said: “For many people, Christmas inevitably involves some level of short term borrowing as a way to spread the costs, often using a credit card. The important thing is to keep that borrowing under control and pay as little in interest as possible. Lenders reserve the lowest rates for those with better credit scores, so it pays to start improving yours now.”
An analysis of the credit history of ClearScore’s 2.6 million users since 2012 shows that January is consistently the most popular month for credit card applications, meaning there is plenty of time to boost your credit score.
To help people track and improve their credit score over time, ClearScore has built the free Timeline tool, available at ClearScore.com, which allows people to track their debt levels and credit score.
How to improve your credit score:
By actively managing your credit score, you will ensure that you get access to the best products on the market – here are Justin’s top tips for improving your score and saving yourself a tidy fortune:
- Sign up to see your credit score – you can get can your free score and report at ClearScore and track your progress using our handy Timeline.
- Check your report thoroughly, regularly and always before applying for credit – report and correct any mistakes you see as this could be damaging your score.
- Make sure that your bank and any credit providers have your correct address.
- Ensure you’re registered on the electoral roll – this is a very simple way of boosting your score.
- Make sure that your name is on some utility accounts – the greater the evidence that you borrow and repay your credit regularly, the better your credit score will be.
- Your score will increase if you use a smaller percentage of your available credit limit.
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