Credit cards Updated:
When was the last time you checked your credit score? If your answer is a while ago – or even worse, never – you may be in for a shock, because not only could it become more difficult to access the credit you want, but you may end up paying more for goods and services, too.
This could be particularly true for near prime borrowers, the research found, and with an estimated 6.8 million near prime borrowers having never checked their credit score, it could be an increasingly widespread issue.
The figures, from NewDay, also show that an estimated 3.9 million near prime borrowers – those who could find it difficult to obtain credit from traditional lenders due to having a limited or adverse credit history, and/or other constraints such as a low income or an inconsistent address history – don't even know how to check their credit score, but this could have seriously detrimental effects.
For example, over 2 million near prime customers have been declined credit in the last three years, and it can start a vicious circle: once you're declined for credit you'll get a black mark on your file, which will in turn make it even harder to be accepted. The more times you apply, the more black marks you'll have, and so on and so forth.
Unfortunately, widespread misconceptions about credit scores could mean it's even less likely for these borrowers to check their history, with 28% of respondents unaware that a poor credit rating can exclude them from accessing credit. A further 38% believe that missing one payment means it is impossible to ever improve their credit score, which could mean they're less likely to try.
Furthermore, 75% didn't realise that a poor credit rating could lead to having to pay more for goods and services (such as mobile phone contracts, broadband and energy bills), which could seriously affect their finances in the long run.
James Corcoran, CEO of aqua card issuer NewDay, commented: "The findings in this report confirm what we know from our experience: there is not a 'one size fits all' approach for consumers in this market sector; their needs are distinct and diverse.
"However, this research also demonstrates that too many consumers are still not aware of their credit score and its importance. For the millions of near prime consumers in the UK, having this knowledge would inevitably help them be better with credit, closing the credit gap that currently excludes millions from accessing better prices for basic goods and services."
Having a thorough grasp of your credit score is vital if you want to boost your chances of being accepted for credit. Make sure yours is up to scratch by heading to a credit check provider, and if it isn't, read our guide for steps to improve it.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.