More and more people are finding that they have
poor credit and are having difficulty in getting loans. Those that are generally affected are low-income consumers.
Credit unions may be able to help those who find themselves in such a quandary. This is according to the Association of British
Credit Unions Ltd (ABCUL).
Credit unions are well established in the UK for lending to those on lower incomes. The application process is much simpler than for high street
lenders as they take into account the applicant's situation for example literacy problems. All applicants to a credit union become members of the union. This way each member knows they can approach their local branch should they have any queries, need
debt advice or financial help.
Credit unions exist to provide access to credit at affordable prices. Repayments are based of affordability taking into account budgeting requirements of each household.
Many credit unions now offer a Benefit Direct account. This account enables members to make
loan repayments directly from their state benefits, which are paid into their local credit union. Members can also use these accounts to start saving.
ABCUL chief executive Mark Lyonette said: "With the increasing popularity of benefit direct accounts and the forthcoming launch of our basic
bank accounts, credit unions' impact on financial inclusion will continue to rise."
