‘The Cost of a Poor Credit Rating’* – a report by Dr John Glen, Senior Lecturer at Cranfield Business School and commissioned by credit card provider aqua – finds that UK families with a poor credit score could be losing £342m a year as they are unable to access the most competitive broadband deals advertised by providers. This is an extra cost of £115 each year on household bills for the average family with a low credit score.
The latest report builds on aqua’s ‘Mind the Credit Gap’ report, which revealed that more than half (57%) of the UK adult population are at risk of being declined credit by mainstream lenders. Using figures from various national sources, from OFGEM to ONS, Dr Glen compared the cost of utility bills, mobile phone bills, finance for white goods and car loans, finding that an average UK household with a poor credit score could be paying £1,170 more across products and services than households with a healthy credit score.
Few people are aware of the importance of having a healthy credit rating, with previous research finding that almost three quarters (74%) of people aren’t aware that having a low credit rating could affect their access to broadband. Awareness was even lower amongst young people with only 24% of under 25 year olds knowing that a bad credit score might prevent them from getting a better deal on these bills. An alarming three-quarters (75%) of people didn’t know that their credit rating could prevent them from being accepted for direct debits, which are often cheaper than pay as you go or quarterly payments, to pay their households bills.
Mario Lupori at aqua credit cards commented:
"Most people aren’t aware that they could access more competitive broadband deals simply by improving their credit rating. Simply put, families with poorer credit scores are paying £342m extra each year on their broadband bills compared to families with strong scores. The good news is there are lots of manageable steps people can take to improve their credit rating, such as registering on the electoral roll, paying bills on time or simply correcting mistakes on their credit report.”
The full report, including calculations and commentary from Dr John Glen, can be found at http://www.aquacard.co.uk/pdf/the-cost-of-poor-credit-rating.pdf
The aqua credit card was launched in 2002 to help the large number of individuals in the UK who could afford the credit but are left un-served by the mainstream credit industry. aqua creates innovative credit building credit cards and seeks to reward customers who look after their account – designed for people looking to improve or establish their credit rating. Representative 35.9%APR (variable). For more information, visit: http://www.aquacard.co.uk/.
Top tips for improving your credit score:
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Notes to editors:
*All stats unless otherwise specified are from Dr John Glen, and his team at Cranfield Business School. Full methodology can be found on page 3 of the report here. Research conducted in July 2013.
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Teamspirit Public Relations
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About New Day
Founded in 2000, NewDay is one of the fastest-growing businesses in the UK and a leading company in the credit card market.
In May 2013 the company completed the acquisition of a retail co-brand card and point of sale finance business for many of the UK’s best-known high street retailers including Debenhams, the Arcadia Group, House of Fraser and Laura Ashley. This purchase is one of the largest credit card portfolios in the UK with 3.4 million customer accounts and balances of £0.9 billion.
Our consumer brands include the innovative aqua branded range of credit cards.