Poor credit rating can cost you as much as £270,000 over your lifetime

Borrowers with a poor credit score could spend an extra £272,302 on interest over their lifetime compared to those with a good credit score, new analysis suggests.

A 20-year-old with a poor rating could rack up £551,787 in interest by the time they are 68 if their score does not improve, according to credit checking company Credit Karma.

This is almost double the £279,485 people with a ‘good’ rating are expected to spend on interest on their mortgages, unsecured loans, car loans and credit cards over their lifetime. 

A poor credit score now costs more than twice as much as in 2020, when the extra interest was £129,073 over a lifetime.

Higher mortgage interest rates contribute the biggest additional cost to people with poor credit ratings — an extra £163,197 — says Credit Karma.

Outstanding credit card balances surged, by 8.7 per cent, in the year to June, according to banking group UK Finance.

l.evans@dailymail.co.uk