Tag: fairquid

Mind the Gap: Making Credit Fair for Everyone

Currently, there’s been a lot of attention on fighting inequality & boosting fairness in the workplace. From the #MeToo movement to gender pay gap, we have a lot of challenges to tackle. But there’s another inequality that needs to be addressed too. The accessibility of fair credit for all.

Credit Explained

There’s no doubting that the world of credit ratings is rife with misconstrued information and misunderstanding. So, let’s understand how credit scores work.

Credit scores are used by lenders to decide whether to offer you credit (such as a credit card or a loan) and what the terms of the offer will be. The higher your score, the better your chances at receiving credit, and the lower rate of interest you will be offered. However, there are many factors that can affect your credit score, such as:

  • Payment history, i.e. late payments
  • Type, number and age of credit accounts
  • Total debt
  • Public records, i.e. bankruptcy, tax liens or civil judgements
  • Length of credit history

Differing Rates

As a result, within the UK, credit scores differ massively across demographic and geographic sectors. By analysing more than 5 million customers over the past year, ClearScore generated a list of areas with the highest and lowest average credit scores– with postcodes in the South of England with higher credit scores than those in the North. The worst area for credit is Sunderland, with residents holding an average credit score of 318.31 – almost 20% lower than the UK’s average score of 380.

Why is there so much disparity? Surely, if we as a country are striving towards fairness, everyone – no matter their location or background – should be entitled to fair, affordable credit.

Well, the current system dictates that those with low credit ratings have limited to no access to reasonably priced credit, which instils inequalities and drives people into even more debt (through credit cards, overdraft accounts or the likes of payday lenders who charge exorbitant interest rates).

Offering a Solution for Employers

We are trying to solve the challenge of rising debt and lack of savings by partnering with employers, to offer employees fair access to financial products. We partner with not-for-profit Credit Unions who are member-owned and are the ethical solution to providing credit & savings accounts.

Get in touch to learn more about how we can benefit your team today!

How to Save as you Borrow (as an Employee)

2 min read

Saving money isn’t easy. Especially when you’re juggling debts. Putting money aside for a rainy day isn’t something we, as a nation, are very good at anymore.

Since the recession, banks have encouraged consumers to borrow money. Interest rates are low, so why not treat yourself? Get a new sofa. A new car. Go to Spain. Buy that shiny gadget you’ve had your eye on for a while. Treat yourself. Treat the kids. Have fun! You only live once (YOLO).

Unfortunately, this mindset has, for millions of families, created an unhealthy relationship with money. For the first time in 30 years, UK households collectively spent more than they earned in 2017. Since over 16 million people have less than £100 in savings, how does one support all this spending? In one word: Debt

Low savings and debt: Impact on employees

Low levels of savings alongside debt is a toxic combination. It causes stress. A lot of it. With sleepless nights, one in four employees has struggled to perform at work due to money worries.

Ultimately, it’s felt at the workplace. Anxiety and stress can cause accidents and absenteeism. With struggling staff, it can also drag down productivity and most importantly – the overall well-being of your people.

Many think that financial stress is something of a taboo, especially at work. Team members aren’t likely to raise these issues with a manager or HR. This puts employers in an unfortunate position that they’re negatively impacted by problems they aren’t aware of and seemingly can’t do much to control or improve.

So what can you do, as an employer, to help your employees where they need it most?

Encouraging positive change

So we already know it’s tough to save when you’re steeped in debt. Without the safety net of savings, anything can go wrong, putting employees at risk.

When you’re looking for credit, there are many barriers to affordable access to credit. For one, your credit score history can leave you with nowhere else to turn but high-interest rate options such as credit cards, overdraft accounts and payday lenders.

It’s not all doom and gloom, though. We’ve got a solution! We enable loyalty and performance with the employer to be used as a credit currency.

What does that mean? Instead of historical credit scores, we measure the current length of service and performance to assess the eligibility of a loan. Using these innovative metrics, means we solve the problem of access to credit because our approval rates get up to 97%. There’s no point providing an employee benefit if it can’t benefit all your employees, right?

Couple this with an attached savings component which nudges employees to, ‘Save as you Borrow’, and voilà – we are changing behaviour for the future! And we really are. Most employees continue saving long after they have paid off their loan.

So how do we pull this off? Our partners are not-for-profit, member-owned, financial cooperatives. In short, Credit Unions. We connect employees to these ethical organisations through our platform, giving them access to the fair credit they deserve.

Partnering with responsible employers that want to offer a benefit that really matters, we are on a mission to bring fair finance to all. We want to put people back on track to saving, becoming debt-free, and being part of the co-operative financial community – one employee at a time!

Get in touch! Let’s be part of the movement to improve employee’s lives together!

Supporting Credit Unions through the #WorkNotWorry Campaign

Read time: 2 mins

Not enough savings and too much debt is a painfully stressful reality for millions of people across the UK. Credit unions are at the forefront of driving change and we, at FairQuid, are right beside them providing access to fair credit.

ABCUL (Association of British Credit Unions Limited) has launched the #WorkNotWorry campaign, with the aim to get more people to start saving and benefiting from credit unions. If you haven’t heard of them, credit unions are not-for-profit, member-owned financial co-operatives. Members (anyone who has an account with them), enjoy the same saving deposit scheme protections and services as high street banks but with better benefits. They can earn dividends, so when the credit union and local community does well, so do the members.

What causes worry at work?

Research shows that 46% of employees are worried about money, and 59% of those feel they’re not performing at their bestbecause of this stress. It doesn’t help that 1 in 4 are not getting enough sleep, which is understandable when 16 million adults have less than £100 in savings, according to the Money Advice Service (MAS).

Media stories about record levels of debt and people with not enough savings always sound like these are problems that happen in other companies, to other people. However, as we know from working with companies across the country, these problems have an impact on more staff than companies realise.

It’s a scary reality that millions of people, including those with families to support, are carrying more debt than they can afford and living one pay cheque to the next. Together with the employer, we can change this.

What can employers do?

When employees are caught in a vicious cycle of perpetual debt they need practical help. As money worries persist, team members can become less productive, take time off sick, make mistakes, and could start looking for another job.

In partnership with credit unions, we offer a practical solution through our innovative wellbeing platform. At FairQuid, both our employee financial wellbeing products have attached savings components whether you Save as you Borrow or Save with a Purpose. We have found that when nudged to save, the majority keep saving after the debt has been fully paid, changing behaviour for the future and working towards becoming debt-free. Combined loan and saving payments come direct from net wages, making it easier for people to budget without having to find spare cash for savings.

Most financial institutions only use credit scores to assess eligibility for credit. However, we know that doesn’t give everyone the fairest chance at accessing finance when they need it most. With our partner credit unions, we reward employee loyalty by assessing eligibility on the length of service and performance. This way, we give employees a way out of debt and into savings, changing long-term attitudes to money, and significantly reducing stress at work.

We believe in the power of the community to help each other and therefore are proud to support credit unions to increase their impact and raise awareness through the #WorkNotWorry campaign.

Want to support your team where they need it most? Join the FairQuid movement and help your staff to #WorkNotWorry! Contact us today.