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New research from Totally Money shows that poor credit can cost borrowers an extra £6,678 on a £5,000 loan. The study also found that 2.6 million households are turning to loan sharks and payday lenders due to the ongoing impact of the higher cost of living since the pandemic. ‌

However, a staggering 31 per cent of loan applications are getting rejected due to poor credit ratings . While there’s no such thing as a definitive ‘credit score’, lenders will check your credit worthiness and affordability rating to see if you’re guaranteed to meet the repayment schedule. ‌

The research found that only one in four people have checked their credit report in the last four years. ‌

READ MORE: One credit card habit could be damaging your score every month R

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