Need to borrow for Christmas? Sort your credit score now for cheaper interest deals
One in five British households are already worrying about festive expenses and nearly a quarter say they will need to take out a new financial product such as a credit card to help manage the cost of Christmas.
While consumers are being savvy by visiting price comparison sites before applying for a new card, research from Clearscore reveals that only one in five will check their credit score and worryingly, 30% have never checked their credit score.
Your credit score is vitally important as it gives lenders an indication of how creditworthy you are and a poor score can affect your ability to get the best financial products.
Clearscore calculates the difference between a ‘low’ and ‘excellent’ score could mean £20,000 in extra interest repayments across a lifetime – nearly the equivalent of a year’s annual take-home salary.
However, despite its importance, 44% don’t realise their credit score affects their chances of being accepted for a credit card and less than half (42%) know the interest rate they’re offered is also impacted by their financial history.
Brits don’t check their credit report because they don’t want to pay to access their data – 34% cited this as the main reason.
Justin Basini, CEO of 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.”
How to improve your credit score:
By actively managing your credit score, you will be giving yourself a chance to access the best products on the market. Here are ClearScore’s top tips for improving your score and saving yourself a tidy fortune, but see YourMoney.com’s Ten ways to boost your credit score for more ways:
- Sign up to see your credit score – there are sites offering free scores, such as ClearScore and Experian.
- 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 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 quickly.
- Make sure 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 – using between 25-30% is ideal.