Here's how much a poor credit score could cost you over a lifetime... and how to improve your score

Borrowers with low credit scores could be on the hook for hundreds of thousands of pounds more in interest payments over their lifetime.

And, as interest rates have climbed, the potential cost of a poor credit score over the course of a lifetime has doubled since 2020, according to figures Intuit Credit Karma.

The data shows a poor credit score could see some shell out a whopping £256,630 in additional interest payments on borrowing over the course of their lifetime, compared to £129,073 five years ago.

The figures, based on a 'lifetime' between the ages of 20 and 68, someone with a 'fair' credit score, around 580, would pay £437,977 over the period.

A 'good' score would be around 610, Credit Karma said, while a poor score, known as 'needs work', is around 550.

The scores are based on those provided by credit reference agency TransUnion. TransUnion's maximum credit score is 710.

By addressing their poor credit score, someone would be able to save themselves almost enough to buy the average UK house – costing just under £300,000 as of November last year.

Incidentally, someone with a good credit score should expect to pay a similar amount in interest over the course of their lifetime; £293,739.

The cost of mortgages, credit cards, unsecured loans and car finance in total could see borrowers with a poor score pay an eye-watering £550,369.

Mortgages account for the largest interest cost, with those with bad credit ratings expected to pay £97,356 in additional interest over their lifetime.

Unsecured loans could also see this group pay an extra £88,596 in interest over the period.

Akansha Nath, general manager (international) at Intuit Credit Karma said: 'Facing your financial future with a poor credit score can be disheartening, from higher interest rates to difficulties getting a mortgage.

'However, what we hope our report reveals is actually how much money can be saved by improving your credit score.'

Despite the impact that a poor credit rating can have on the financial products people are able to access and the interest rates they are lumbered with, a quarter of people admit missing or paying at least one credit payment late in the past 12 months alone.

As many as 58 per cent of those aged 18 to 24 have missed a payment over the past year. Some eight per cent of these have missed 10 or 11 payments.

Only a fifth of these were concerned that missing payments could affect their ability to take out credit in the future.

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The first port of call for many will be to check their credit score. This can be done through the UK's three main credit reference agencies: Experian, Equifax and TransUnion.

These firms build a record of your credit history, taking into account your history of credit use, as well as County Court Judgements and the electoral roll.

Keeping your information on the electoral roll up to date is also an easy way to boost your rating.

Obtaining your credit history will allow you to check that the information on it is up to date and correct. For example, if you have a paid a debt, make sure that it is shown on your credit file.

You should also only apply for credit that you are likely to get, and avoid making too many applications at once as this can indicate that you are desperate.

Those with poor scores can also make use of credit builder credit cards. These are designed for those that need to build their scores and who may not be accepted for standard cards.

These cards generally have far lower credit limits than regular cards, allowing you only to borrow amounts that are within your means to pay back on time. The interest charged on these cards is often higher than a normal card.

Credit Karma itself has launched an interest-free credit account called Credit Build Plus, which comes with a £2.50 monthly fee.

The firm said the product will help people with poor scores to improve their rating, allowing users to track their progress.

Credit Karma said members with low credit scores will only see an average of two credit card offers on its platform, but will gain access to additional options when their move into the 'fair' score band.