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Brits waste as much as a year’s salary on avoidable interest

ClearScore's Savings Calcuator shows you the savings you could make on the interest you're paying by improving your credit score.

Press Release 16.09.2015

New data released today by ClearScore.com reveals that British credit card users could save the equivalent of a year’s annual take-home salary in extra interest repayments across their lifetimes by actively managing their credit scores.

ClearScore compared the difference in credit card interest paid by someone with a lower credit score with that of someone with a higher credit score and found that this was more than £19,000 across a lifetime – more than the average annual UK take-home salary.

Your credit score and report act as your ‘financial CV’ and are used by lenders to determine how risky a borrower you are. Lenders will reserve the best deal and rates for people they see as lowest risk.

Justin Basini, ClearScore founder and CEO commented, “Many people underestimate how much a poor credit score can cost them over a lifetime. In fact, a poor credit score can mean you’re charged higher interest rates, given a lower credit limit or simply rejected altogether. People should be actively monitoring and managing their score to ensure they get the best deals and keep interest repayments as low as possible.”

ClearScore looked specifically at credit cards, as the cost differences are far greater for this type of borrowing. Interest rates can vary by 16% between the best credit cards in the market – generally only available to those with an excellent credit score – and those cards available to people with a poor credit score. The total interest payment savings available to consumers can run into hundreds of thousands of pounds when other forms of borrowing which also rely on credit scores – such as mortgages and personal loans – are also taken into account.

Despite the potentially huge costs – and savings – available, 61% of Brits have never checked their credit score or even know what one is. To help consumers understand how their credit score can impact the cost of credit across their lifetimes, ClearScore has created a free Savings Calculator tool which allows consumers to calculate their annual cost of credit cards. It also lets consumers set a credit score goal and then compare the annual savings they will benefit from by improving their score.

Justin Basini, ClearScore founder and CEO commented, “The good news is that everyone can take some simple steps to improve their credit score and benefit from better, cheaper deals. Your credit score is not determined by your income so while not everyone can have an “excellent” credit score, there are steps we can all take to improve ours.”

ClearScore’s tips on the Top five ways to quickly boost your credit score:

  1. As soon as you get a new credit card, always set up a minimum payment monthly direct debit to avoid ever missing a payment.
  2. Make sure you are registered on the electoral roll.
  3. Consider applying for a credit card if you don’t have much credit history – borrow small amounts and pay off the balance each month.
  4. Update registered addresses with your bank.
  5. Check your report thoroughly and report any mistakes.

Find the ClearScore savings calculator here.

 

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