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Low Credit Borrowers to Gain More Access to Banks?

Low Credit Borrowers to Gain More Access to Banks?

According to the Better Banking Campaign, headed by a group of charities and coalition groups, between 5 and 7 million people are excluded by mainstream banks.

Exclusion means that those people are unable to get a basic overdraft, mainstream credit, loans and over a million cannot even receive a Basic bank account (a simpler version of a current account).

When you apply for any of these products at the mainstream bank, a credit check will be carried out – and unfortunately, for many people the application stops there.  Thanks to all manner of reasons, from an unpaid bill to serious matters like a county court judgment, millions of credit files are simply not good enough for the requirements of banks.

The Better Banking Campaign believes that more people should be accepted by regular banks, and is calling for financial institutions to be given obligations and incentives to encourage this. 

The group made some research and found that 70% of people think that being able to acess mainstream financial services should be a basic right given to all people, while over half of those asked believe that it is “essential for everyday living”.

Fortunately, there are financial alternatives for borrowers – such as payday loans – yet while they provide cash quickly, they are more expensive than a typical loan offered to someone with a perfect credit score.

Before taking any type of loan product, you should carefully consider your risks – will you edge into debt by taking a loan?  If you are timely with loan repayments, you could improve your credit score for future applications.  Yet if you struggle to pay back a loan or credit card you will adversely affect your file.