More people will be able to access affordable finance

More people will be able to access affordable finance through credit unions under planned government reforms.

At the moment, a person can only become a member or use their services if they have a “common bond” with the membership, such as having the same employer or living in the same area.

So the government wants to change the system so someone who’s a member of a credit union but moves away from the area it’s situated in can refer a relative or household member to join and access its services.

Under the current rules, a person can only do this if they live in the same area as the credit union.

What are credit unions?

Credit unions are community-based financial organisations that exist to benefit their members rather than to make profit.

Members save together so they can offer each other fair, low-interest loans.

The members of a credit union will share something in common.

For example, they might:

• live in the same area
• work for the same employer
• belong to the same community group 

And unlike alternatives like loan sharks, credit unions are authorised and regulated, which means your money is protected.

What difference will the changes make?

The government says that 50,000 people across Britain who can’t currently refer a relative or household member would be able to do so if these plans come into effect.

“Credit unions are at the heart of communities up and down the country, offering a trusted route to access affordable finance, facilitating greater household resilience and promoting financial inclusion,” said economic secretary to the Treasury Lucy Rigby.

“That’s exactly why we’re supporting the sector to grow and reach even more people.”

How to get a credit union loan

If you think a credit union loan is for you, follow these steps:

• Search: see if there’s a credit union you can join at findyourcreditunion.co.uk.
• Join: apply online, by phone or in person. There might be a wait while they process your application.
• Save: some credit unions may ask you to start saving before applying for a loan.