One in five (21%) British households are already worrying about festive expenses and nearly a quarter (24%) say they will take out a new financial product – such as a credit card – to help manage the cost of Christmas.
But while 70% will visit a price comparison site before applying for a new card, and over one quarter (27%) turn to trusted news articles to find the best deals on the market, only one in five (23%) will check their credit score. In fact, less than half (45%) of card-carrying Brits have checked their score in the last year and 30% have never checked their score.
Brits should be taking simple steps to boost their credit score now if they want to reduce the cost of Christmas borrowing. Yet 42% of people don’t know their credit score can affect how much credit card interest they pay, according to new research from ClearScore.
A low score can be costly
A person’s credit score is one of the most important numbers you have. A poor score can affect someone’s ability to access the best financial products. For example, 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.2
Despite this, 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 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.”
A new year, a new…card?!
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.