Too many people in lower income communities across the UK are forced to turn to loan sharks because their credit histories are too poor to obtain credit from a mainstream lender, the National Debtline has suggested.
For many of those in debt, borrowing from a commercial high street lender "isn't an option" because of a "very bad credit rating", spokesperson Beccy Wilks said.
Moreover, a consumer will often be seeking as little as £50 in credit to tide them over a rough patch and supplying such sums simply is not commercially viable for high street lenders.
Nevertheless, the risks of borrowing through unauthorised sources should not be underestimated: "We do speak to clients who have gone to a loan shark for a loan and are experiencing threats of violence and physical intimidation," Ms Wilks stressed.
National Debtline supports the commitment from treasury minister Ed Balls to devote £36 million to improving access to affordable credit by bringing credit unions to deprived communities.
But more is needed to bring alternative sources of credit quickly, Ms Wilks believes, eliminating the need to turn to loan sharks, a group who consumer minister Ian McCartney recently described as "the lowest of the low".To learn more about debt management, click here.
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