Prepare to be a bit shocked!
ClearScore analysed 50,000 anonymised credit histories and pay data and it has revealed that the gender pay gap has a negative impact on a woman’s finances beyond her payslip each month.
It is so disappointing to hear this.
The study found that women’s credit scores lag behind those of their male peers. On average, women score just 330 out of a possible 700 compared to the male average of 345.
The upshot of this is that women are less likely to be accepted for the best financial products on the market and could end up paying more for credit than men.
The gender pay gap is at the core of credit inequality.
Did you know on average women earn 20% less than their male counterparts, taking home just £24,000 to the male average of £30,000.
Becuse of this inequality As women are forced to use more of their available credit card limit each month. ClearScore data suggests women use nearly two fifths (39%) of their limit compared to men who use just over a third (35%). The ideal amount is around 25-30%, as using more can negatively affect your credit score.
I was also pretty shocked to find a third of women (36%) do not have a credit card in their name. This can keep scores low because lenders like to see evidence that a borrower can responsibly manage credit on a regular basis.
But we are better with money!
However, the research also shows that when you remove the pay-gap effect, women are actually the better sex when it comes to sorting their finances. If average scores are compared by salary band, the results are reversed and women consistently have slightly better credit scores than men. It is only because more women fall into the lower pay-brackets that the overall average for women is lower.
So what can we do?
To address the balance, Anna Kilmurray from ClearScore shares her tips for how you can improve your credit score:
- Access your score regularly and correct any errors on your credit report.
- Ensure that your name is on at least some of your utility accounts – even if you live with someone else.
- Consider applying for a credit card if you have a slim credit history.
- As soon as you get a new credit card, always set up a minimum monthly direct debit to avoid missing a payment.
- Make sure you are registered on the electoral roll.
- If you move, don’t forget to tell your bank.
- Don’t use too much of your available credit limit.
Love these tips so simple and do-able!