Britain’s borrowing booms – are you getting the best deal?
Accessing your credit score can help you know your chances of getting the best deal on credit cards, loans and mortgages
The Bank of England has reported lending to consumers jumped in March by its biggest amount since before the financial crisis. In that month alone, consumer credit grew by £1.24 billion, which was over 50% more than the forecast of £800 million by a Reuters poll of economists.
Evidently consumers are more confident with the economic situation in the UK and their own personal financial situations. This is indicated by the huge increase in borrowing, much higher than the last six month average of £900m.
But what does this mean for you?
With the greater availability of credit, we all have more opportunities to borrow more. Greater borrowing also means that the market for credit has become more competitive. If you are looking for the best rates, this is good news: Moneyfacts has revealed that a year ago, the average rate on the market for someone looking to borrow £5,000 over three years was 9.1%. However, by February of this year, that rate had fallen to 8.1% – the lowest average rate since Moneyfacts started recording rates in 2007.
However, what you must bear in mind is that every time you borrow money, whether it’s in a form of a mobile phone contract, a loan or a credit card, this will be registered on your credit report and it will therefore affect your credit score. If managed correctly, taking out credit can be a good thing. If you pay back your credit on time, you are proving to lenders that you are responsible with your finances. This has an effect on how lenders will see you as the potential customer when calculating your credit score. However, the opposite is true if you are irresponsible with your borrowing, as missing payments will negatively affect your credit score and report.
You need to make sure that you are aware of what impacts your credit score and report, and how this affects your financial situation. Only 51% of successful applicants are offered the advertised APRs (annual percentage rates) for loans, mortgages, etc., which means nearly half of applicants are offered a worse deal. With this mind, you need the access to your credit score and report so that you can know your chances of being given the best deal.
That’s why at ClearScore we believe giving you access to your credit score, which has not been easy up until now.