How Can A Loan With No Credit Check, Repaid Via Child Benefit, Be A Good Thing?
Credit unions around the country have opened their doors for small loans around £500 with repayment over 12 months.
Why we made that decision?
People with good credit scores are privileged to be offered low interest loans. That is not the case for those who missed repayments in the past and negatively impacted their credit score.
A person with low score is not always a person who intentionally skips paying bills. Life through at us the sugar and the bitter. For example, someone may had lost their job and was in a position to choose to pay food or bills for a month or a couple months until they found another job. During this time, clearly their credit score hit the bottom.
To fix it, this person has to work hard for many more months just to reach the Fair score. How frustrating! What if they need to fix their car, white goods or buy new ones, there is a big chance that they have to pay over 1000% APR on a £300 loan from a payday.
Is that fair?
Credit unions core values are community first, there is no profit to make, but support to give. We are the fair access to money without the unfair rates to help any member stands back up on their feet. Fixed rate for everyone, no matter what credit score they have. We know that, this £500 family loan makes a huge difference for families.
How no credit check loan really works:
There are rules we cannot break. But there are permissions we are given to bend the rules to help people have fair access to credit. One of those restrictions is trying to guarantee a loan is being repaid and one of the flexibilities is overseeing the credit score if that person can afford the repayment.
However, how can we guarantee that the loan is repaid without credit score check then?
This specific loan is open for families with children because they need it the most. Therefore, repayments via a stable income into their membership account is necessary. This obviously is a budgeting matter for the family. Usually child benefit is spent on daily expenses. That doesn't change when they commit that child benefit payment to be received after deduction of debt. It is only a matter of re-budgeting.
We check the affordability though. It means we must make sure we do not break any rules or regulations, we must check bank statements for minimum 30 days back, making sure that this loan is not putting this person in further despair. 99% of the times the lending team call the applicants for a chat to understand the spending habits and finding all reasons to pass the affordability and get the loan approved.
What happens when the child benefit is paid into CLEVR Money member's account?
This is the secured repayment option we are allowed to use specially with no credit check. Once the DWP pays the child benefit, the loan is deducted and the rest is sent to the member's personal bank account. Meanwhile, families welcome this method as part of no hassle repayments that they don't need to get involved in, peace of mind.
Benefits of the no credit score loan is:
Approval rate is over 99%: most common reasons to say no are problems with gambling, high credit expenditures or minus accounts.
Credit score doesn't matter, the interest rate is fixed for everyone.
The repayment via child benefit is a peace of mind method, it removes the stress of thinking about debt repayment.
Boosting up the credit score, especially if the member decides to apply for a top up*.
*top up: when a member applies for another family loan while they already had a family loan with us and made at least 3 repayments, we close down the first loan account by deducting the amount due, then lend the rest to the member. This is a popular method used widely within our member-community.
Always remember that CLEVR Money is not-for-profit, member-owned credit union, members save and borrow to have a better life style and financial stability.