Zopa launches new credit tool

Zopa has announced it has launched ‘Borrowing Power’ a new tool designed to help customers get access to cheaper credit. It represents the first time a lender has been transparent about what factors it looks at when deciding who to lend to.

Zopa calculated that a customer taking out a new loan with Zopa could save an average of £600 over the loan period by increasing their borrowing power score by one point. The savings can be much larger however, as somebody borrowing £7,500 over three years could save £1,228 by moving their borrowing power from four to five.

Lending decisions and credit worthiness have been shrouded in mystery for far too long, believes Zopa. New research by the lender reveals that 29 per cent of Brits don’t understand how to improve their credit score in order to access cheaper credit and a further 45 per cent are unsure how lenders calculate the rate of borrowing. The poll of 2,000 UK consumers also highlighted that the majority of UK adults (61 per cent) don’t understand credit scores completely, and half don’t even know what their own score is (48 per cent).

Didier Baclin, Zopa’s Chief Product Officer, said “Giving people certainty, transparency, and ultimately the power to lower the cost of credit in the future is unique in the market. With Borrowing Power, we are putting the power back into the hands of the customer – allowing people who may not be eligible for credit , or those who want a lower rate, to take action and unlock a lower rate in the future. Zopa wants to take away the smoke and mirrors linked to creditworthiness. This new tool takes us one step further towards helping people feel good about their money.”