Get credit savvy: How to secure the best card or loan deal in a lending squeeze

One year on from the first lockdown we look at the state of the credit market and help you bag the lowest rates

Man on a tablet

If you’re looking for a credit card or loan, you might find it tough to get competitive rates as lenders have reined in many of their top deals in the covid pandemic.

But there are lots of things you can do to improve your chances of getting a great deal. So what do you need to know:

  • Our data shows there was a significant tightening in the credit market during the first lockdown last year. The number of credit card products that were available halved between March and June 2020 and loan deals fell by more than a third
  • The proportion of people being rejected for loans also spiked. The number of loan searches coming back as ‘non eligible’ for a loan rose from a typical average rate of 13% (under normal market conditions) to 38% in April 2020 and remained above usual levels for much of the year.
  • The good news is credit markets have recovered in recent months. That said, there could still be a bumpy road ahead as we emerge from lockdown, particularly once government starts to withdraw covid financial support for businesses and workers
  • It is more important than ever to take control of your credit score so you can feel confident about getting a great rate before you apply
  • We have the tips and tools to help you get into pole position for your next card or loan

Credit squeeze

The credit card and loan markets tightened up quickly last year as banks and other lenders became nervous about the stability of the economy and jobs – and how this would affect borrowers’ ability to repay their debts.

When this happens, lenders quickly scale back the number of products on offer – to reduce their overall lending. They also increase interest rates and become stricter with lending criteria – so only those with the very top credit scores are accepted.

A recovery began towards the end of 2020 – and the market is almost back to pre-covid levels – but experts say things are still fragile.

If the wider economy starts to suffer again, the market recovery we’re now seeing could stall. This is why it is important for you to get yourself into as strong a position as possible before  you apply for a card or loan.

How credit card and loan offers got squeezed in 2020

Credit cards and loans offers in 2020

Source: MSM on March 1 2021

How the proportion of borrowers not eligible for a loan spiked in the first lockdown in 2020

Proportion of borrowers not eligible for a loan in 2020

Source: MSM on March 1 2021

Feel good about your credit score

The key to unlocking the best card and personal loan deals is to take care of your credit file and nudge up that all-important number – your credit score.

Your credit score is a number – or rating – individual to you and based on the information from your credit report. Scores may vary between the different credit reference agencies, which all hold credit and payment information about you. But as a general rule the higher your score the more attractive you are to potential lenders, because your score gives lenders an idea of how reliable you are, when it comes to managing your finances and repaying your debts. A higher credit score means you are more likely to be accepted for the best credit card deals and loan rate.

Credit scores are calculated based on a range of factors, including how much debt you owe, payments you’ve made on time or missed and your access to credit. For example you might have a credit card with a £5,000 credit limit but your outstanding debt is just £50. This is sometimes referred to as your debt to credit ratio. A lower ratio will usually mean a higher credit score because it shows you are not heavily indebted.

There are lots of things you can do to improve your credit score, which is important before you apply for a new card or loan. Making debt repayments on time is crucial for a good score, but other small changes can also boost how lenders view your ability to manage your debts.


See which things you can tick off your list and nurture your credit score:

  • Get a free copy of your credit file and check all your details are correct. Mistakes get made on credit files, but you can ask for changes where something is inaccurate
  • Understand what factors affect your credit score and take our quiz
  • Get on the electoral roll – this way lenders can confirm your identity, boosting your credit score. Not eligible to vote in the UK? Send documents with your proof of residency to the credit reference agencies to add this to your file
  • Avoid switching your bank account just before you apply for a card or loan – you’ll have a higher credit score if you’ve held an account for a long time
  • Look at your existing lines of credit – overdraft, credit cards, store cards and loans. If you have cards you don’t use anymore it can boost your credit score if you close down the account
  • Look at any joint bank accounts you may have with a partner or housemate. If they have a poor credit history it might be beneficial to you not to share a joint account as your credit file will be linked to theirs. Likewise if you’re separated from someone make sure you no longer share old accounts. Ask the credit reference agencies for a notice of disassociation
  • Keep your debt to credit ratio as low as possible. If you know you’ll be looking to borrow more or you want to switch an existing card balance to a better card, improve your credit score by reducing existing borrowing as much as possible

How much can I afford to borrow?

Once you’re ready to apply, use our calculators to work out what your loan or card is going to cost to repay each month. This way you can avoid nasty shocks and be completely comfortable you can afford the extra borrowing.

Loans calculator

Credit card calculator

You can also keep credit applications down – and avoid rejections which negatively impact on your credit score – by using our free eligibility checker. This shows you what cards or loans you’re likely to be accepted for before the lender does a credit check, so you know where you stand, and can make an informed choice when you apply.

Moneysupermarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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