Having a poor credit score can significantly impact your financial health, leading to higher interest rates and increased costs when borrowing money. Institutions use credit scores to assess how well individuals manage their finances and repay debts, making it a vital component when applying for loans, including mortgages and personal loans. Research from TotallyMoney indicates that those with poor credit scores could pay an astonishing £6,670 more on a £5,000 loan compared to individuals with better scores. Alarmingly, many people are unaware of their credit status, with only one in four checking their credit report in the last four years. Among those who did, 32% found errors that negatively affected their scores. Experts warn that a poor credit score can lead to a cycle of debt that is hard to escape. Simple actions, like registering to vote, can help improve your score, while a complete lack of credit history can be just as damaging.
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