People looking for loans could soon find it easier to access credit unions and other community lenders, as Experian adds them into its comparison services.
With many households having had to raid their savings during the coronavirus pandemic, the initiative aims to help bring affordable credit from ethical and non-profit institutions to a wider audience – including people who find themselves “financially excluded”.
Experian said it had found that around 25% of customers searching for loans through its comparison services are not currently eligible for offers from mainstream lenders. People who cannot access mainstream banks may turn to high-cost lending, such as a payday loan, as an alternative, or even an illegal loan shark.
Credit unions and community development financial institutions (CDFIs) could help people to keep their borrowing costs down. However, they may not necessarily be as “visible” online generally to borrowers as a payday loans website, for example.
Credit unions are community savings and loan co-operatives which are owned and run for the benefit of their members. CDFIs provide finance to businesses, social enterprises and people who are unable to access mainstream finance from high street banks and elsewhere. Experian said providers signed up to the initiative include Manchester Credit Union, Scotwest, and Scotcash. It is in discussions to bring more lenders on board soon.
Clive Lawson, managing director of Experian consumer services, said:
“The financial impact of coronavirus is a worry for many of us and Experian is committed to supporting financial inclusion, especially during these challenging times. That’s why we are giving our customers another option if they are ineligible for credit offers from traditional providers.”
incuto, which is a technology supplier to credit unions, worked alongside Experian to integrate the participating community lenders on to its comparison platform.
Andrew Rabbitt, incuto chief executive, said:
“incuto’s strategy has consistently focused on how our technology and partnerships enable credit unions and community banks to reach a wider audience.”