Access to credit that is affordable, transparent and fair is a geographic issue. Differences in credit need, and in the options available on the high street, create vast inequalities between regions, towns and even streets. Demos’ annual Good Credit Index measures access to affordable credit across the country to understand these geographical discrepancies at a granular level, and inspire place-based approaches to tackle them.

Our Good Credit Index 2020, supported by NewDay, a leading UK specialist financial services provider, follows the first index from 2019 and finds that:

  • Physical credit environments are improving, with many bad credit options disappearing from the high street. However, with the need for credit growing, and likely to soar in 2020 with the impact of Covid-19, the lack of affordable credit options in many places remains a cause for concern.
  • The pattern identified in 2019 persists: small and medium-sized post-industrial towns often suffer from a combination of low credit scores, high deprivation and credit need, and a physical environment that offers too few sustainable lending options and many tempting unsustainable ones.
  • Some cities have a high proportion of ‘credit invisibles’ – people with no credit score due to a thin or non-existent credit report – even where those cities otherwise score well on the Good Credit Index. These cities might have many affordable credit options, which are nevertheless out of reach for this group, consisting of young people, older people, the financially excluded, recent migrants and the financially struggling.

Alongside this year’s Good Credit Index, we have published a toolkit to share the learning from our Good Credit Project in South Yorkshire, a place-based financial inclusion initiative in the Sheffield City Region. It sets out practical tips to address financial exclusion, supported by case studies from people we worked with including the city region mayor and the public, private and voluntary sectors.

The toolkit will support leaders across the UK, including local authorities and metro mayors, to tackle financial exclusion and boost resilience among residents, as part of rebuilding local economies and strengthening communities in the wake of Covid-19.

Heather Williams-Taplin, Head of Major Projects at Demos and co-author of the report, said:

“Access to credit that is transparent, affordable and fair is going to be even more vital in our new post-Covid reality. As our Good Credit Index this year demonstrates, there’s still a way to go before everyone can get affordable credit when they need it, so that they aren’t pushed towards high-cost, short term credit that can have huge negative consequences.

“Our new practical guidance which shares learning from our successful South Yorkshire Good Credit Project, will hopefully provide a significant and positive step for metro mayors and local authorities to improve financial resilience in their regions.”

Read the full report here.

See the full index here.