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Do you know how much a poor credit score will cost you?

Do you know how much a poor credit score will cost you?

Nov 16th 2022

Under embargo: 00:01 Wednesday 16th November 2022

People with a poor credit score could be at risk of paying an extra £693 interest each year on the typical credit card balance.

TotallyMoney, the credit app which helps everyone move their finances forward, has commissioned to calculate the cost of a poor credit score for those with interest-bearing credit card balances. It found that:

  • For the average credit card balance of £2,472, those with a poor credit score could be paying an extra £58 p/m (£693 p/a) in interest when compared to those with a good credit score*
  • People are paying interest on 54% of credit card balances, a 7% growth in the past 12 months**
  • A 75-point credit score increase could move a sub-prime borrower’s credit score into the prime score band, resulting in an average saving of £55 p/m (£544 p/a)

This research calculates average monthly and yearly interest charges for prime, near-prime and subprime customers for balances ranging from £1,000 to £7,500.

The true cost of a poor credit score

TotallyMoney and Moneycomms have calculated the average monthly and yearly interest charges for prime, near-prime and sub-prime credit card customers for balances ranging from £1,000 to £7,500.

The research found that someone classed as sub-prime and paying an interest rate of 49.9% on their credit card would pay £102.79 interest a month on the average balance of £2,472.

By improving their credit score so that they were classed as ‘near prime’ they could reduce their credit card interest rate to 29.9% and pay £61.60 a month in interest. Further improvements could lead to becoming a ‘prime’ customer, paying interest at a typical rate of 21.9%, equalling £45.11 a month in interest.

So, the subprime customer would be paying £57.68 a month more in interest, which equates to £692.16 a year.

How many people pay interest on their credit card balances?

With 51% of people paying interest on credit cards each month, and a credit card balance growth rate of 11%, more interest is being paid than it was last year.

Worryingly, the number of adults with no credit history at all has grown by 29% in the past six years†. These people will struggle to get a mainstream or ‘prime’ credit card and are more likely to be offered a sub-prime card instead. These cards can come with APRs of up to 50%.

Poor credit scores and thin credit files can not only lead to customers being handed higher APRs on their borrowing, but they’re also likely to have access to fewer products, receive lower credit limits and be subject to shorter introductory offers. Additionally, they may end up paying more for other products too — seeing higher car insurance premiums, being forced onto more expensive prepayment energy metres, and finding themselves limited to pay-as-you-go mobile SIM deals.

Additional YouGov research, commissioned by TotallyMoney found 51% of adults would have difficulty covering an unexpected bill of £500‡. This suggests that saving money by cutting interest on existing credit agreements could make a real difference to people's finances.

Alastair Douglas, CEO of TotallyMoney, comments: 

“When it comes to credit, a good score can give you access to the best offers, meaning you’ll pay less for what you borrow. Those savings can be put towards paying off existing debts quicker, or to help navigate the increased cost of living.

“If you’re currently struggling to keep up with repayments, you should contact your lender at the earliest opportunity. It may seem daunting at first, but it could help you avoid defaulting on a repayment which can leave a mark on your credit report for years to come.

“At TotallyMoney we’re on a mission to help everyone move their finances forward. One way we’re doing this is by providing customers with our free app, which puts them in control of their own financial data and provides them with all the information they need to gain financial momentum.”

Andrew Hagger, personal finance expert from, added: 

“It’s inevitable that some consumers will face a chronic financial squeeze this year, leading to late or missed payments on their financial commitments.

“As a result, credit records will be damaged and mean far higher interest rates if customers look for personal loans or credit cards in the future.

“The cost of having a poor credit record will come as a big shock when people realise that they’re no longer eligible for best buy card offers and suddenly face credit card rates of 30% or 40% APR if they apply for new plastic.”


TotallyMoney’s top five tips to credit score improvement:

By improving your credit score you can unlock the most competitive offers and the best rates, saving you money and helping you move your finances forward.

  1. Check your report: It’s free to do and you can make sure that all the information available to lenders is correct and up to date. If you spot an error, you can raise a dispute.
  2. Get on the electoral register: Having your name on the electoral register can help lenders check your address and identity. Plus, if you've been at the same address for a while it can make you appear to be more settled and stable.
  3. Credit building cards: These are designed to help build your credit score and improve your chances of qualifying for the most competitive deals. Check your eligibility before you apply. This can help you avoid being rejected which can act as a red flag to other lenders.
  4. Manage payments: To get a good credit score, it’s important to show that you’re able to manage credit accounts. This means never missing payments and, if possible, you should always try to pay more than the minimum each month.
  5. Credit utilisation: Try to use less than 25% of your available credit across each of your accounts. This will suggest to lenders that you’re in control of your finances.


* research commissioned by TotallyMoney (May 2022)

** UK Finance Card Spending Update (May 2022)

† Overlooked and financially under-served PwC research commissioned by TotallyMoney (May 2022)

‡ YouGov research commissioned by TotallyMoney (April 2022). Nationally representative sample 2,441 adults.

For more information, please contact the press team

About TotallyMoney

With a focus on the one in three UK adults financially under-served by the financial services industry, TotallyMoney is the credit app on a mission to help everyone move their finances forward.

TotallyMoney believes people’s financial data should work for them, and not against them and with more than four million customers, they provide the UK’s only free, live credit score and report.

Its service helps customers understand their financial position and provides personalised recommendations so they can start creating financial momentum. TotallyMoney also works closely with leading lenders, to ensure eligible customers are matched with the right products, underpinned by its robust data, product and tech capabilities.

TotallyMoney is regulated by the Financial Conduct Authority (FCA).

We're on a mission to help everyone move their finances forward and gain financial momentum.

TotallyMoney is an independent credit broker, not a lender. Our comparison service works with most leading lenders, covering the majority of the market. Though we may be paid a fee by lenders or brokers this never influences how our products are ranked.

We don't provide financial advice. Product information is obtained from independent sources and rates displayed may vary depending on your personal circumstances. While we make every effort to ensure that information is up to date, you should always confirm the terms of the offer with the product provider.

TotallyMoney is owned and operated by TotallyMoney Limited which is registered in England and Wales (Company Registration Number 06205695). TotallyMoney Limited is an Appointed Representative of TM Connect Limited, which is registered in England and Wales (Company Registration Number 06967012) and authorised and regulated by the Financial Conduct Authority in respect of consumer credit related activities (FCA FRN: 511936). Trading Address and Registered Office: Chapter House, 16 Brunswick Place, London N1 6DZ. Credit is available, subject to status, only to UK residents aged 18 or over.

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