Think a low credit score only affects your access to credit? Think again. Families that have poor credit scores spend an additional £1,170 per year using their credit cards to buy everyday household items and cover living expenses, according to a report from credit card provider Aqua.
The report, called “The Cost of a Poor Credit Rating”, reveals the immense cost a low credit rating can have on everyday household expenses. Over the course of a year, a household with a poor credit score will spend hundreds – often thousands – more than it needs to on basic expenses like utility bills and credit card accounts.
It also reveals that a staggering 57% of British adults are at risk of being declined if they apply for credit due to poor credit histories. Mainstream lenders exclude over half of the country’s population from accessing credit due to bad historical records regarding access to credit.
Progressive Credit chief executive James Corcoran stated that the credit card issuer commissioned the report because it believes in “the importance of helping people be better with money, and so be better off.”
“The irony is that the people who need their money to go further are the ones who end up paying more.”
Individuals and families with poor credit ratings are often restricted from accessing long-term financing contracts, which offer the best value for money. Instead, they’re forced to use month-by-month contracts, which are significantly more expensive, as many companies prevent them from accessing long-term, affordable credit.
Highlighting the large gap in pricing for those with good credit and those with poor credit, the report lists the average cost of broadband broadcast packages for families in the UK: just £59.88 per year for families with good credit, and an astounding £174 for families with a poor credit history.
