Improve Credit History to Get Best Rates
New analysis looks at the importance of Brits to keep an eye on their credit profile to enable them to secure credit when they need it.
Many consumers will be seeking personal loans or credit cards to consolidate their debts as household finances become stretched following the budget cuts, Moneysupermarket suggests.
To apply for credit, consumers are urged to maintain their credit rating and check their file regularly before applying to prevent disappointment.
There is a big difference in the products available to those with a good credit profile and to those with a poor credit profile. The latter could see a borrower pay thousands of pounds extra in interest.
“It will come as no surprise to many people that the difference between a good and poor credit history can add up to hundreds and sometimes thousands of pounds in additional interest,” said Kevin Mountford, Moneysupermarket head of banking.
“The benefits of having a clean credit history are obvious, and consumers need to do everything they can to avoid falling into the poor credit trap, as once blemished, improving their profile can take time.”
Those looking for a balance transfer with a 20 months interest free period, such as the market leading Barclaycard Platinum Credit Card, will only be offered one if they have an excellent credit rating.
Those with a poor rating in comparison would typically be eligible for a credit card with a representative rate of 39.9 percent APR – which would cost the borrower £632.29 in interest over the first two years if they paid the minimum payments on a £1,000 balance.
Pre-Pay Cards UK
Those looking to rebuild their credit history may benefit from a pre-pay card UK. This pre-pay card is available to anyone, regardless of whether they have a good credit rating or not.
The card does not have an overdraft facility so the user can only spend the funds they loaded onto the card. While using the card does not automatically improve a person’s credit rating, it does help the person spend within their means, so they can pay off their other debts in full, if possible, and on time, which could improve their credit rating.