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23 Apr 2021

Women's lower credit scores mean they pay nearly £17,000 more to borrow

Which? explains how you can boost your credit score

Women have a lower average credit score (652) compared with men (705), according to new research from credit report and credit score provider Credit Karma.

Over the course of a lifetime, this is estimated to cost women an additional £16,913 when taking out financial products such as personal loans, credit cards and mortgages.

Your credit score can help lenders decide whether to offer you credit and at what cost. The best rates are usually reserved for those with good credit scores, while those with a poor credit rating can be offered a worse deal with a higher interest rate.

Here, Which? explains how Credit Karma has determined the 'gender credit score gap' and what action you can take to overcome it.

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Why is there a gender credit score gap?

The research suggests that the disparity in credit scores between men and women is more societal than financial, as one of the biggest factors is women not having financial products in their own name.

Credit Karma's research shows that 31% of women have some or all of their financial agreements in their partner's name.

Women were less likely to have credit cards (70% vs 76%), mortgages (40% vs 47%) and personal loans (29% vs 38%) than men.

However, women were more likely to use 'buy now, pay later' (BNPL) products compared with men (25% vs 19%).

BNPL providers such as Klarna offer unregulated credit and so don't have to report information to credit reference agencies on how borrowers make repayments, which means this form of borrowing has no positive impact on credit scores.

Having a credit card, mortgage or personal loan in your own name will mean that how you manage the account is recorded on your credit report, and it can have a positive impact on your credit score if you keep up with repayments.

Not having any, or just some, credit agreements in your own name limits your credit history and means that you are perceived as a higher risk by lenders, as there is less evidence that you can borrow responsibly.

Have you ever had an issue with a BNPL scheme? Tell us about it using our new BNPL complaints form.

Women are less likely to check their credit score

Credit Karma also found that financial disengagement was higher among women than men, with 41% of women saying they don't know their credit score, compared with 35% of men.

Women are significantly more likely to have a sub-prime credit score - that is a score of 550 or less with Credit Karma - as a result. Just 12% of men fall into this bracket, compared with 20% of women.

Although different credit score providers have different scales - for example, Credit Karma's score (which is derived from TransUnion data) is out of 710, whereas Experian's is out of 999 - a lack of credit history would be similarly damaging across providers.

How to boost your credit score

While women may be more likely to have a lower credit score than men, there are some easy steps that anyone can take to boost their score and get better rates and products from lenders.

  • Make sure you have bills or sources of credit in your name - Even if you don't have loans or credit cards, putting things like phone or utility bills in your name will help to build your score.
  • Don't miss a payment - Fundamental to your credit score is proving you are a responsible borrower, which means making sure you pay your bills on time.
  • Register to vote - Ensuring you're on the electoral roll is one of the quickest and easiest ways to improve your credit score.
  • Check your score - Even if you don't need credit now, it's worth keeping an eye on your score in case you do in the future. It can also help you spot any fraudulent activity. See our guide on how to check your score for free.
  • Use a credit builder card - If your score is low and you'd like to improve it, there are cards specifically designed to help build it up.

Find out more:how to improve your credit score