Equality Council UK

MK Equality is a provider of independent financial advice, with a particular emphasis on promoting equality and fairness. Our mission is to offer unbiased financial guidance and support to all individuals, regardless of their background or circumstances.

Accessing Finance and Credit Scoring Implications

In today's world, having access to money on a regular basis can be a challenge due to the increasing costs of everyday living. Research conducted within the UK financial sector has shown that a significant number of people do not have savings in their current accounts, which means that they are effectively living from month to month. This can make it difficult for individuals to purchase essential items that require small and disposable sums of money. When individuals do not have the necessary funds to make these purchases, they often turn to lines of credit and short-term finance options to meet their purchasing requirements.

While these options may provide a quick solution, they often come with high levels of interest and increased payments. For example, a one-off purchase of a 400 item paid for with higher levels of finance can result in a repayment of over 700. Therefore, the question becomes whether the consumer item is necessary and whether it is worth the additional costs.

Consumer Needs and Disposable Income

Meeting consumer needs can be a challenge when individuals have limited disposable income. Fortunately, there are several short-term finance options available for people who need money quickly. One option is to apply for a credit card, which can provide a quick and easy solution for purchasing items. However, credit card applications often require a credit score, which can have implications for future credit applications if an individual has a poor credit rating.

Another option is to explore the unsecured lending market. While this is typically for individuals who need larger sums of money, there are hundreds of options available, each with its own advantages and disadvantages. For individuals with a solid credit score, approaching mainstream lenders may be a viable option, as they typically have lower interest rates or annual percentage rates. However, mainstream lenders often have a more rigid credit scoring system, which means that they may not be accessible to everyone.

Store Financing Options

Finally, individuals can consider purchasing items and repaying them on a monthly basis directly through the store in which they have purchased goods from. Catalogues have been a popular option in the UK consumer market for over half a century and many items sold through catalogues have a monthly repayment option attached to them. This option allows individuals to purchase the items they need and repay the costs over time.