You are here: Home - Credit Cards & Loans - News -

Need to borrow for Christmas? Sort your credit score now for cheaper interest deals

0
Written by: Paloma Kubiak
06/10/2016
If you’re already thinking you’ll need to borrow money to cover the cost of Christmas, it’s worth getting your credit score in order now to pay less interest later.

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:

  1. Sign up to see your credit score – there are sites offering free scores, such as ClearScore and Experian.
  2. 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.
  3. Make sure your bank and any credit providers have your correct address.
  4. Ensure you’re registered on the electoral roll – this is a very simple way of boosting your score quickly.
  5. 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.
  6. Your score will increase if you use a smaller percentage of your available credit limit – using between 25-30% is ideal.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week