Do I need a good credit score to borrow money?

Some lenders will regularly review all of their existing customers to see whether their credit scores have changed. If they find that yours has gone down and you’ve become riskier to them, they might try to increase your interest rates. It’s for this reason that keeping a good credit score is just as important as getting it in the first place.

If you’re unlucky, you might also face an interest rate increase when you haven’t done anything wrong. This could be because other people accepted for the same deal as you have not been so reliable with their repayments, which can drive rates up for everyone.

However, you do have certain rights in this situation. First and foremost, your lender legally has to tell you directly that your rate is going up. If it’s because of a risk they think you pose specifically, they have to tell you that too.

Unless the increase is because your interest rate is linked to the Bank of England base rate, or the end of a promotional period, they also have to allow you to reject the increase, close your account and repay the debt at the old rate of interest if you request this within 60 days of the increase. If this is on a credit card specifically, you could consider applying for a balance transfer credit card to transfer the debt and pay it off to your new provider at a 0% interest rate. Read our guide Balance transfer credit cards and personal loans compared for the latest deals on balance transfer credit cards.

The good news is that credit card companies will not increase your interest rate within the first 12 months as long as you follow their terms and conditions, and they won’t increase them more often than once every six months after that.

Author: wpadmin

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