Rochdale named as a 'credit desert' where people struggle to access affordable borrowing

Rochdale has been named as one of the UK’s 29 “credit deserts"

Rochdale has been named as one of the UK’s 29 'credit deserts' where people may struggle to access affordable borrowing, according to a think tank.

‘Credit deserts’ may be places where there is a clear need for borrowing, along with high concentrations of high-cost lenders and households with low average credit scores.

A report from Britain’s leading cross-party think-tank Demos has for the first time mapped the UK’s credit environment, finding 29 ‘credit deserts’, including Rochdale, where people struggle to access affordable credit – despite a clear need for it.

The Good Credit Index combines 21 datasets, including credit scores, local high street provisions, data from county courts and web searches to give the clearest idea yet of how the area you live in affects your ability to get affordable credit.

While there are many ‘credit havens’, where there is a low credit need and a plethora of affordable credit options, there are also ‘credit deserts’, marked by limited access to sustainable credit options, where people have little choice but to turn to high cost, short term credit providers, like payday lenders and pawn shops.

Demos said that whilst many of the places identified as a ‘credit desert’ do have bank branches, building societies and credit unions, credit scores are so consistently low that most residents would struggle to access these.

Author of the report, Demos senior researcher Sacha Hilhorst, said: “For those with good credit scores and low need, it’s easy not to think about credit too much. But for millions of people, credit is a regular source of worry. With little savings and very limited access to affordable credit, something as ordinary as a fridge breaking down can send you into a financial tailspin.

“The Good Credit Index shows this is not just a matter of personal finances, but also geography. In places where insecure contracts are the norm and payday lenders are abundant, people face very different choices from people in credit havens. To break these cycles of credit is disadvantage, we need systemic change as well as place-based strategies."

The Index also found there are fewer high street lenders operating than ever before, that low income areas are more likely to be ‘credit deserts’ and that there is a clear consensus as to what constitutes ‘good’ credit. 

It should be affordable, sustainable – offered only to those who can pay it back – and fully transparent, both in advertising and its use.