The IS and Carnegie Trust UK have produced a briefing paper for elected members which explains what is meant by affordable credit and why it has a key role to play in locally based policies that alleviate poverty and address income inequality. With households struggling to meet their financial needs, and very few having savings to fall back on, being able to access small amounts of credit for short periods is critical.
The paper provides examples of two possible approaches: credit unions and Community Development Finance Institutions (CDFIs). Scotland’s 94 credit unions offer access to savings and loans across all 32 local authorities. Many credit unions offer a wide range of financial capability support including assistance with budgeting, school saver clubs and innovative funeral poverty loans.
At least six local authorities in Scotland directly support two CDFIs – Scotcash and Conduit Scotland. Both offer affordable credit and access to advice services, and in the case of Scotcash also support to open bank accounts.