The rising cost of living is not just a burden on household budgets; it could also be damaging your credit score. Even a single missed payment can have lasting effects on your financial future. According to research from credit score app CredAbility, 24% of UK adults, or 12.2 million people, have missed at least one payment in the last year.

As of April, the energy price cap will increase to an average of £1,849 per year, with additional rises in water, broadband, car tax, and other bills. Many people are already struggling to keep up with their financial obligations, raising concerns among experts about the long-term impact on their finances.

Aaron Peake, Personal Finance Expert at CredAbility, warned that even a single missed payment could significantly lower your credit score, making borrowing more expensive and potentially more difficult. This could lead to higher interest rates on credit cards, mortgages, and loans, or in some cases, prevent access to credit altogether.

Peake particularly cautioned against resorting to “riskier, unregulated credit products” such as payday loans and Buy Now, Pay Later schemes, which can further jeopardize financial stability. With a lower credit score, borrowers may end up paying an additional £256,630 over their lifetime, exacerbating the already rising cost of living.

Experts have outlined four essential steps to protect your credit score in the coming months:

• Don’t cancel direct debits. If you're struggling, consider reaching out to providers for repayment plans.
• Explore financial support available to eligible households from suppliers like energy providers, local councils, or the government.
• Review your credit report for any errors that could negatively impact your score.
• Seek free debt advice from organizations such as Citizens Advice, National Debtline, and StepChange.

If you're considering cutting off essential direct debits, contacting your providers for repayment plans may be a better option than outright cancellation. Additionally, reviewing your credit report for mistakes—such as incorrect credit limits or debts listed under a similar name—could help give your credit score a boost.

Some simple steps, like registering on the electoral roll at your current address, can also help improve your credit score at no cost. To avoid damaging your credit, it's important to be mindful of applying for too many credit products in a short period, as this can hurt your score. Using eligibility checkers before applying can help mitigate this risk.

Sites like CredAbility and ClearScore offer free access to check your credit score and report, and free services such as Citizens Advice and StepChange are available for additional support.