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"Credit unions could benefit from more stringent lending criteria from lenders"

By admin | January 21st, 2008 | General

The credit crunch that swept across the UK last year has had a number of damaging effects, and one of those is that lenders across the UK and covering a range of sectors from credit cards to loans and mortgages have really tightened up on their lending criteria, making it more difficult for many consumers to get finance. This is because of the increased worries over potential defaults as well as higher inter-bank lending fees. However, according to a recent report one part of the financial sector – credit unions – could actually benefit from this move.

A recent report has shown that consumers are finding an increasing number of doors closed when it comes to borrowing off banks and building societies, and as a result an increasing number of consumers will turn to credit unions to fulfil their financial needs. In fact, the government has recently announced proposals to make joining a credit union easier and more flexible for consumers so that more consumers will have access to credit union finance and advice.

At present there has to be a common bond for someone to join a credit union, such as living in a certain area or working for a certain employer. However, the new government proposals could make it easier for many more people to benefit from the facilities that credit unions offer.

Lucia Webster, head of membership services at the Association of British Credit Unions Limited, stated: ‘Borrowers should always check out the loans available at their local credit union. ‘Many people think credit unions are just for savers. But they offer affordable loans with low and transparent interest rates. Most charge no more than 1% per month in interest. They are a safe and accessible option for many.’

Alan Wright

Tags: credit unions

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