UK high street giant Royal Bank of Scotland (RBS) and challenger bank Monzo are both introducing news services that will allow customers to check their credit scores for free from their banking apps.
RBS launched the feature earlier this week, NatWest, part of the RBS group follows, on 10 March, while digital rival Monzo rolls out the service to its three million customers between now and the end of next month.
Free credit checks will mean that customers are able to check their chances of approval for a range of products and services, such as mobile phone contracts, loans, credit card and mortgages and loans, without having to use a credit checking agency.
By comparison, credit agencies Equifax charges customers £7.95 a month for its credit services, while Experian and TransUnion charge £14.99 a month, although all three offer a 30-day free trial. High street bank Barclays’ app also offers a credit checker but costs £5 a month.
What does this mean for the customers?
Monzo’s app will also offer customers reasons why their credit scores may change from month to month and suggest ways to build up their score. The challenger bank’s service will recognise if a customer isn’t on the electoral roll and encourage them to register, to boost their credit rating.
More than half of Britons, or 55%, have applied for a credit card, loan or mortgage without ever checking their credit score, leaving them at risk of being turned down or offered poor interest rates, according to data from credit checking firm Experian.
A poor credit score can add £262 to your monthly mortgage bills and cost you an extra £78,531 in interest over the term of a 25-year mortgage, said money-saving site Moneycomms last year.
Some fintech experts say the move by Monzo is the first of a stream of new services the digital bank is rolling out, including business bank accounts and the relaunch of its premium ‘paid-for’ accounts.
“Launching a credit checker suggests Monzo may be planning on expanding its credit offering,” Sarah Kocianski of banking consultancy 11:FS told the Telegraph, “This kind of thing usually suggests a company is planning on launching a credit card or will try to sell you a loan – although the tips on how to improve your credit score may mean Monzo is planning to go along the money management and advice route.”