Credit Score Basics > Does Premium Credit affect credit rating?

Does Premium Credit affect credit rating?

Wollit Team1 minute read · Updated 18th September 2024

Premium Credit is a service that lets you pay for insurance and other costs in monthly instalments instead of all at once. While this can help make payments easier to manage, it can affect your credit rating since it is reported as a loan. Here is how it works and what you should do about it.

What is Premium Credit?

Premium Credit is a service that allows you to pay for insurance policies (like car or home insurance) and other expenses in monthly instalments. Instead of paying the full amount upfront, you can spread the cost over several months, making it easier to manage your finances.

Basically, when you choose to use Premium Credit, you enter into a loan agreement with them, which pays the full amount of your insurance upfront. You then repay them in monthly instalments.

Of course, there are usually fees and interest charges associated with this service, which can make it more expensive than paying upfront.

Can using Premium Credit affect my credit rating?

Yes, using Premium Credit can affect your credit rating in several ways.

First, Premium Credit is reported as a loan on your credit report. This means that lenders will see this debt when they check your creditworthiness.

If you make all your payments on time, using Premium Credit can help improve your payment history, which is an important factor in determining your credit score.

However, the opposite is also true. If you miss payments on your Premium Credit agreement, this will negatively affect your payment history and lower your score.

You shouldn’t worry too much about it, though. The cost of insurance won’t be a significant piece in your total debt. As long as you keep making payments on time, it may even bring a small boost to your credit score.

At the end of the day, though, what lenders care most about is your credit history.

Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app that reports your monthly subscription as loan repayment, helping you build a history of timely repayments without the risk of getting hit with high-interest charges or going over your card limit. It can even report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills on time.