The Bank of England has kept interest rates at an all-time low of 0.5% since March 2009, but this is about to change. Central Bank governor Mark Carney has revealed that the base rate is set to rise, and the new rates may come into force before the next election.
While borrowers can expect to pay more for their mortgages, credit cards or loans, they may be able to negotiate better rates if they have a good credit rating (you can find out yours here - http://www.creditexpert.co.uk/credit-rating.aspx).

The 0.5% base rate was first introduced in an attempt to stimulate the flagging British economy in the immediate aftermath of the financial crisis. The idea was that the banks would be able to borrow funds more cheaply from the Bank of England, and they would then pass these savings on to their customers by offering better lending rates. To a certain extent, this has been successful. People have started borrowing again, the housing market is performing well and the economy is gradually picking up. As a result, emergency economic measures are not needed any more.

According to Carney, the plan is to gradually bring rates back up to a "new normal" of 2.5% by 2017. Analysts and economists have suggested that the rates will rise in 0.25% increments, with the first increase happening by the end of this year. Anyone who is struggling to pay back a mortgage, loan or credit card may soon find that they are faced with a much bigger bill at the end of each month.

A recent report by the HomeOwners Alliance and Myhomemove found that more than a third of UK homeowners are worried about paying back their loans once interest rates start to rise.
"Homeowners are already really struggling to make ends meet, and millions could be pushed into real financial hardship when interest rates start to rise," said Paula Higgins, Chief Executive of the HomeOwners Alliance. "It shows just how severe the cost of living crisis is that a rise in interest rates could lead to some homeowners struggling to afford food or being forced to sell their homes."

This issue is of particular concern for anyone who is on a tracker mortgage, or homeowners on a fixed term contract that is due to expire in the next year or two. But a high credit rating will help homeowners to negotiate the best new rate when the interest rate rises kick in.
This is no small thing - the Office for Budget Responsibility (OBR) has estimated that a homeowner with a £150,000 repayment mortgage may see their monthly bills increase by £230 if the base rate hits 3%, as this primary source indicates.

Experian can help borrowers to assess their current credit rating and offer advice on how to improve it. A high credit rating means that you are more valuable to your bank, and this puts you in a powerful position when you are discussing new rates.