A recent announcement by credit reference agency, Experian, plans to include credit unions into their eligibility checkers – and this may be incorporated into other price comparison websites (PCWs).  

Credit unions are nonprofit organisations, typically run by a small group or community with a common interest to serve their local communities. With over 250 credit unions across the UK, they are notorious for offering low-cost loans, with the average loan of £500 from a credit union costing around 26% APR, compared to a high-cost payday lender which charges around 1,000% APR. 

With credit unions, the eligibility criteria is usually very relaxed, usually to cater to those who are unemployed or with adverse credit histories and there are no late repayment fees usually incurred. 

The decision to include credit unions onto their panel comes from Experian after highlighting that around 25% of their customers are not eligible for mainstream loans. The agency has partnered with three community lenders – Manchester Credit Union, Scotwest and Scotcash and is in discussions to bring more credit union lenders onto their panel later this year, helping their entire audience get access to finance when they need it. 

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. 

“When a customer is unable to access mainstream credit from lenders, some feel as though they have no other option but to pursue other means such as payday loans or even illegal loan sharks. These products often have very high-interest rates and can be structured differently from mainstream offers, which can make it more difficult to calculate the cost of credit and increase the chances of customers spiralling into debt. This innovation with incuto to offer our customers credit options from not-for-profit community lenders provides a much-needed alternative.” 

David Beard, founder of Lending Expert commented: “We welcome the idea to add credit unions to our price comparison tables and panels of lenders.” 

“It is important to note, however, that credit unions are not available to everyone, since you may need to be located within the area it is operating in or working in the public sector to be eligible. Equally, credit unions can take up to 7 days to process and fund your loan application, whereby a more commercial lender can take around 1 hour.” 

“The rates offered by credit unions are extremely low and they serve a very important purpose in society. There are bound to be customers who will not get approved because their employment status, income or credit history – and this is where offering a credit union could be a fantastic solution. With no late fees or added interest on top, they are a superb addition for any price comparison site who is looking to help customers find the right product for them.” 

Partner content