MIND THE GENDER CREDIT GAP – HOW ELSE IS THE PAY GAP IMPACTING WOMEN’S FINANCES?
A new analysis by ClearScore of 50,000 anonymised credit histories and pay data reveals that the gender pay gap has a negative impact on a woman's finances beyond her payslip each month.
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. This credit conundrum means 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.
At the root
of the credit inequality is the gender pay gap; on average women earn 20% less
than their male counterparts, taking home just £24,000 to the male average of
£30,000.1 As a result, 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.
Another reason
for the credit gap is that more than 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.
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.
To address the balance, Anna Kilmurray from
ClearScore shares her tips for how you can improve your credit score:
1.
Access your score regularly and correct any
errors on your credit report.
2.
Ensure that your name is on at least some of your
utility accounts – even if you live with someone else.
3. Consider applying for a credit card if
you have a slim credit history.
4.
As soon as you get a new credit card, always set
up a minimum monthly direct debit to avoid missing a payment.
5.
Make sure you are registered on the electoral
roll.
6. If you move, don’t forget to tell your
bank.
7. Don’t use too much of your available
credit limit.
Anna Kilmurray, ClearScore, "Women
are being hit twice as hard by the gender pay gap; firstly in their bank
accounts on pay day and secondly, by the financial deals they’re likely to be
offered by the bank. There are steps everyone can take to bolster their credit
score which could improve the terms of the credit they take out. The main thing
is to make sure you have some form of credit in your own name and to use it carefully.”
Notes to editors:
ClearScore analysed an anonymised sample of 50,000 users to better understand the differences between men and women’s credit scores.
2 Exact figures can be seen in the table below
Salary
Bracket (in £)
|
Female
|
Male
|
<1
|
329
|
296
|
1-5000
|
285
|
281
|
5001-10000
|
304
|
297
|
10001-15000
|
306
|
295
|
15001-20000
|
331
|
317
|
20001-25000
|
350
|
342
|
25001-30000
|
380
|
361
|
30001-35000
|
393
|
379
|
35001-40000
|
413
|
400
|
40001-45000
|
422
|
408
|
45001-50000
|
427
|
419
|
>50001
|
421
|
430
|
3 Exact figures can be seen in the table below
Salary
Bracket (in £)
|
Female
|
Male
|
<1
|
2.8%
|
1.7%
|
1-5000
|
11.2%
|
6.3%
|
5001-10000
|
17.2%
|
7.0%
|
10001-15000
|
21.2%
|
12.0%
|
15001-20000
|
17.9%
|
16.9%
|
20001-25000
|
11.6%
|
15.3%
|
25001-30000
|
7.0%
|
12.4%
|
30001-35000
|
3.6%
|
7.5%
|
35001-40000
|
2.7%
|
6.2%
|
40001-45000
|
1.3%
|
3.6%
|
45001-50000
|
1.1%
|
3.1%
|
>50001
|
2.4%
|
8.2%
|
About
ClearScore:
ClearScore
(www.clearscore.com) is a service which allows consumers to access their credit
report and scores for free as often as they need or want. ClearScore was
co-founded by CEO Justin Basini and investors Blenheim Chalcot and QED
Investors.
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