Your money-making expert. Financial journalist, TV and radio personality.
This is a paid article on behalf of Creditspring
A national debt charity has warned that a startling number of households are turning to credit cards and loans “to plug the gap between their income and outgoings” this winter.
As energy bills soar and the cost-of-living increases, it has been reported that a whopping two-fifths of people are already behind on one or more of their household bills. The huge financial pressure on people across the county is rising alarmingly. Now nearly a fifth of low-income households owe money to high-cost lenders. According to Bank of England figures this year, in fact, over 14 million people are excluded from mainstream financial services due to poor credit ratings – and this number is rising, fast.
The battle to get people away from dangerous loan sharks and taking on unaffordable loans is bigger than lots of us realise. Many people are signing up for levels of credit they can’t afford and are quickly finding that the repayments alone will lead them further into the red. High-cost lenders typically have no consideration for the financial wellbeing of borrowers, which has catastrophic consequences for people’s finances, often pushing them into debt spirals that can feel impossible to escape.
In lieu of adequate government support, the onus now falls on lenders to ensure they are lending responsibly and protecting borrowers.
Creditspring launched in 2016 as a new kind of responsible lender, and has been disrupting the credit market ever since- making borrowing simple and safe. It provides affordable credit to people who fall into the ‘near-prime’ segment, whilst also providing the tools to empower them to improve their long-term financial stability.
It has a subscription model – a fixed-cost, low-risk credit solution that gives members access to two loans per year, with clear repayments, capped costs, and no hidden charges or confusing APRs. Think Netflix for loans – you know exactly how much you’re paying, and this figure is fixed.
This model also means people know up front the cost of borrowing and, importantly, there are no late fees. It makes it simple for people to evaluate the real cost of borrowing and eliminates the risk of falling into a debt spiral.
Creditspring’s way of working and offering credit is particularly important now when the country is in a period of national financial instability. It enables people to access responsible credit without the risk of financial harm – something which is not often available to ‘near prime’ borrowers.
“It’s important to be aware that using credit particularly to cover essential spending carries risk, especially for someone with less financial resilience who may find the only option available to them is high-cost credit,” said Sue Anderson, spokesperson for debt charity StepChange.
Very few lenders, however, take this into consideration. To ensure it is lending safely, Creditspring uses in-depth credit assessments – including open banking technology – to accurately measure an applicant’s creditworthiness. This results in consistently more informed and responsible lending decisions that protect borrowers.
It also has several free tools such as the Stability Hub and the Spring Score, that provide members with weekly customised support and actionable tips to encourage more informed financial decision making. Creditspring works closely with leading debt charity, StepChange, to ensure professional financial support is easily accessible to applicants and members should they need it.
By avoiding high-cost lenders, Creditspring saves its members an average of £117 each year in borrowing costs – amounting to more than £17 million across its member base. As well as saving people money, after joining 90% of members saw improved financial stability and 82% saw an improvement in their credit score. A good credit score has knock on effect on other areas of financial wellbeing, for example it can make getting a mortgage easier with more competitive rates.
Creditspring has a rating of 4.8 on Trustpilot, which is in stark contrast to research findings that show a third of people think lenders are deceitful and dishonest. The juxtaposition of these two statistics goes to show that Creditspring really is the lender doing it differently. It is the lender that’s disrupting the market and building trust with UK borrowers by prioritising their financial wellbeing.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.