Consumers are making significant financial errors which could be damaging their credit rating according to new research from comparethemarket.com, the majority of people (55%) don’t know what their credit rating is and 43% would have no idea how to improve it.

The research suggests that the UK has many blind spots when it comes to taking out credit and that people are not aware of how to maximise their chances of securing a loan or a new credit card or borrowing at the best rates possible. When asked about factors which could negatively influence their credit score, as many as 90% did not know that closing a credit card might negatively impact their rating, and 17% were unaware that late payment on their bills would also have an effect.

Conversely, many are not aware of the small steps they can take to improve their credit rating and become a better borrower. Only 40% of people realised that registering household bills in their name can positively impact their rating. Over half (54%) had not appreciated that registering on the electoral roll could also improve their score.

The research shows that a fifth (19%) of UK adults have had a credit card application declined. The most common reason for not being accepted was because of poor credit history (57%), followed by having too much debt already (30%). A quarter (25%) were declined because their income was not high enough; amongst 18-24-year olds, this number jumps to nearly one in three (32%).

This high rate of rejections could be linked to people being in the dark about how much they would be able to borrow and requesting unrealistic credit limits as a result. If they were looking to take out a credit card today, over one in ten (11%) estimate they could borrow up to £5,000, but the same number (10%) don’t think they’d be eligible to borrow any money at all.

There are many tools available to help people work out their borrowing eligibility but as many as 80% of people have never used a soft credit checker before applying. Soft checkers calculate the percentage chance of being accepted for credit cards, without impacting your credit score.

John Crossley, Director of Money at comparethemarket.com said “Taking out credit can be a positive and productive act, helping us pay for home improvements, holidays, a new car. But it is so important to make sure you are taking the steps which prove your responsibility to lenders, while also ensuring you only borrow what you can afford to repay. Just a few small changes could make all the difference between being accepted for a credit card or not. When applying for credit, take the time to understand how likely you are to be accepted by doing a soft check online and it’s a good idea to shop around for the most competitive cards which offer the best rates and rewards.”

Regions most likely to have a credit card application declined
Scotland 23%
North West 21%
West Midlands 21%
Yorkshire & Humberside 20%
Eastern 20%
London 20%
South East 20%
Northern Ireland 19%
South West 17%
North East 16%
Wales 14%
East Midlands 13%