Creditspring launches new lending product to support millions of near-standard borrowers across the UK
By Edlin Cardoza
October 14, 2021
- Credit Management
- Credit rating
Subscriber loan provider, Creditspring, launches Step, a new credit creation product that helps members gradually improve their credit score without the risk of further debt. New research from Creditspring shows that more than a quarter (28%) of people aged 18-34 do not know how to improve their credit score, and new borrowers will benefit from this affordable, easy-to-use solution.
Step, the industry’s first credit-taking product where the issuer takes the risk through mortgage lending, offers members a small, interest-free loan in exchange for a fixed monthly fee, with the permission of one person, sharing data information lending to members with credit rating agencies to help people build their credit score in a low-risk way.
The product was released as a direct response to the rise of “disputed” credit companies in the United Kingdom. People sign up and pay monthly fees to these companies believing that it will improve their access to credit, but the “credit score” that these companies help improve is not even what lenders ever see. They are circulating in the confusion around credit scores and are just another example of companies that deceive people who seek support.
The Step is designed to benefit the United Kingdom 10-14 million almost high-end borrowers whose credit records make it more difficult to access major credit products. This forces many to turn to higher-cost, short-term alternatives – such as payday loans or guarantee loans – which are often accompanied by extortionate interest rates and hidden commissions and charges. In fact, unaffordable credit was the source of one-third of all complaints to the Financial Ombudsman Service last year and the most common customer issue. The difficulty of repaying loans can lead to a debt spiral and in turn negatively affect an individual’s credit score, leaving prospective borrowers with even fewer options the next time they need credit.
Currently, there is confusion and concern about credit scores, especially among the younger generations, with one third (33%) of people worrying that the financial impact of COVID-19 has negatively affected their credit score. For these individuals, Step provides interest-free loans, allowing customers to create their own credit score to improve their chances of being accepted for future credit – like a mortgage – later in life. Members pay a fixed cost of £ 5 per month and receive a first deposit of £ 100, followed by a second deposit of £ 200 over a 12-month period, with repayments reported to credit rating agencies.
Neil Kadagathur, Creditspring Co-Founder and CEO, comments: “Step offers our members an affordable and affordable way to build their credit profile, with no hidden fees to deal with. We want to enable borrowers with the tools to make more informed financial decisions that contribute to better overall financial health in the long run, because we believe our work ends when our customers no longer need us. Our goal is to help our members gain better access to basic, affordable credit products after using Step to improve their credit profile. “
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