• Neil Kadagathur , CEO at Creditspring


• 05.10.2021 04:00 pm
#credit #Creditspring

Typically, when we think of someone struggling to access affordable credit, we think of young people who haven’t borrowed in the past. The truth is that over the course of their lives, many people struggle to access affordable funds and have to rely on credit - not just young people. Indeed, thin credit files among older generations is more common than we might realise. This is not only frustrating for people but limiting. Credit is hugely important, from covering unexpected expenses to building credit history. Our research found , three in ten (30%) think borrowing money has helped them to access a wider range of experiences than they would have been able to afford otherwise. And a third (34%) of 65-74 year olds agree that being able to access credit when they need it has been an invaluable resource for them.

As it stands, however, a quarter of UK adults across all ages struggle to access responsible and affordable credit. In turn, many of these prospective borrowers are left with no choice but  to seek high-cost options, which, attached to hidden charges and complicated T&Cs, run the risk of missed repayments, eroding credit scores and even unmanageable debt in the long-term. 

The industry has to some extent, been improved due to the crackdown on payday lenders, but more needs to be done; after all, a third of all complaints to the Financial Ombudsman last year was around unaffordable credit - the most common issue for consumers.

It should come as little surprise that trust in lenders has, up to now, been eroded, with 39% believing lenders are irresponsible businesses that do not care about the overall financial wellbeing of individuals. 

At Creditspring, we want to change this, by providing affordable, easy-to-use loans and a free education platform - the Stability Hub - for near-prime borrowers of all ages whose credit files are thin or in need of repair. 

When retiree Michael, aged 81, needed to do some work to his conservatory roof, he was unable to source the money to do so. Having paid off a mortgage many years before, Michael now found himself with a thin credit file which meant he struggled to access funds.

Michael was able to borrow a small amount of money through our interest free, subscription loan service and  noted that the transparency around costs saved him a lot of worry. 

By supplying affordable back-up finance that cannot rack up interest, we allow people like Michael  - who many might not think of as ‘near-prime’ -  to access credit in a simple, easy-to-use way that does not come with risk of spiralling into debt. 

It is my hope that as regulation reduces scope for high-cost lenders to lend to near-prime customers, a greater number of responsible, regulated options will be available to creditworthy borrowers of all ages, enabling them to have more control over their money, manage costs and improve their credit score, giving them more options in future. Fintechs can play an important role in facilitating inclusive lending by challenging the incumbents to develop customer-centric models and innovating to create products that are more accessible, affordable and transparent.