Christmas may be a distant memory now, but have you ever stopped to think just how much Christmas costs? According to an analysis completed by ClearScore and economists, Cebr, over a lifetime, the average British family spends a whopping £35,000 on Christmas, and £2,494 of this is interest alone! Considering that the average annual salary is £28,000, we spend more on Christmases than a year's salary.
What's more, one in six families borrow £685 every year to help cover the cost of Christmas, with credit cards being the most common form of borrowing. This hits those with poor credit scores the most – they could end up paying £3,259 in interest on top of the original debts (over a lifetime of borrowing). On the flip side of the coin, people with better credit scores could end up paying just £1,766 in interest which is a reduction of a massive 46%. Whilst borrowing for Christmas shouldn't be our first port of call, if you are faced with having to borrow money for Christmas or any other expenses then having a good credit score will help you to secure the best rates and pay less interest. Want to know why? The best rates on credit cards are kept for people who are at a lower risk of defaulting – those who have higher credit scores! It is always a good idea to keep your credit score in tip top shape, because you never know what the future will bring.
Tips to improve your credit score
Improving your credit score doesn't just help with credit card spending around Christmas – it can make it easier to get credit such as a mortgage, and get a better rate. If you are looking to improve your credit score then here are some tips from ClearScore for you:
- Sign up to see your credit score – you can get can your free score and report at ClearScore and track your progress using their Timeline.
- Check your report thoroughly, regularly and always before applying for credit – report and correct any mistakes you see as this could be damaging your score.
- Make sure that your bank and any credit providers have your correct address.
- Ensure you’re registered on the electoral roll – this is a very simple way of boosting your score.
- Make sure that your name is on some utility accounts – the greater the evidence that you borrow and repay your credit regularly, the better your credit score will be.
- Your score will increase if you use a smaller percentage of your available credit limit.
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