Credit, Collections & Insolvency News
Six in ten (62%) people in the UK have a credit card, however nearly two thirds (65%) don’t fully understand how their credit card use can impact their credit score, according to research from Compare the Market.
The research found that although nearly a third (31%) of people say they have a “strong” credit score, nearly one in five (18%) are unsure what their credit score is. This could have meaningful implications when it comes to borrowing as people may unknowingly hold a low credit score and as a result may struggle to apply for a mortgage or smaller loan.
The impact of not knowing your credit score or having a poor credit score is evident in the research. Nealy one in five (18%) of respondents are doubtful that they would be accepted for a future credit card application.
This research follows Compare the Market’s latest Money Action Index that found three quarters (76%) of households with children at home using credit cards struggled to pay off their monthly balance in the past six months due to rising living costs. This included 32% of these households who struggled to repay every month.
Alex Hasty, Director at Compare the Market, said “While some might think that credit cards are used exclusively for larger purchases or purchase protection, we now know that some people are using credit cards for everyday purchases such as food shopping or fuel to help tackle the ongoing cost-of-living crisis. As such, it is more important than ever that people fully understand how using a credit card can impact their credit score.”
“Following the steps outlined above can help to improve your credit score and prove to lenders that you are a responsible borrower. If you’re looking to take out a new line of credit, it’s important to check in advance what you are eligible for. Tools such as the Compare the Market’s eligibility checker will help determine what cards you have a greater chance of being accepted for without affecting your credit score.”