You know that sinking feeling when the washing machine starts making that expensive-sounding noise, or when the school sends home a letter about a £200 trip that’s apparently “essential for your child’s education”? Life has this annoying habit of throwing financial curveballs right when you’re least prepared to catch them.
For most people, the instinct is to stick it on a credit card for a month or two, or maybe dip into an overdraft until payday sorts things out. But what happens when the banks take one look at your circumstances and decide you’re not their cup of tea?
When the system works against you
Here’s the frustrating bit about mainstream lending – it’s almost entirely based on ticking boxes on a computer system that doesn’t know you from Adam:
- Had a missed payment three years ago? Computer says no
- Main income comes from benefits? Computer says no
- Never borrowed before so no credit history? Computer says no
It’s particularly maddening when you’re receiving Child Benefit, which is honestly one of the most reliable income streams in the country. It turns up like clockwork every four weeks, rain or shine. But try explaining that to a high street bank’s algorithm.
The cruel irony is that when you can’t access mainstream credit, you often end up paying way more. Those payday loan companies charge accordingly – sometimes over 1,000% APR. It’s what economists politely call “the poverty premium.”
A different approach that actually makes sense
At London Mutual, we reckon this whole setup is pretty unfair. Your past shouldn’t hold your future hostage, and having benefit income shouldn’t automatically disqualify you from accessing decent credit.
We charge 42.58% APR, which works out to 3% per month. If you borrow £200 for a couple of months to replace that broken washing machine, you’ll pay £12 in interest total. Compare that to the cost of lugging your laundry to the laundrette for weeks on end.
The really important difference is that every application gets looked at by an actual human being who understands that life is messy and complicated. Maybe you had a County Court Judgment a few years back, but you’ve got a perfectly reasonable explanation for what happened. These are the kinds of nuances that computer systems miss but people can understand.
Building something better, not just borrowing
We’re not just helping you deal with today’s problem – we’re actually trying to set you up to be in a better position next time something goes wrong:
- Credit building: Every repayment gets reported to credit agencies, gradually helping rebuild your score
- Automatic savings: Save a bit extra each month while you repay
- Community support: Access to budgeting workshops and financial guidance
Sarah from Southwark borrowed £300 when her washing machine packed up. Over the year it took to pay it back, she also managed to save £120. Now she’s got that safety net there for next time.
Being part of something bigger
The thing about being a credit union is that we’re owned by our members, not shareholders. We’re not trying to extract maximum profit from people when they’re vulnerable – we’re trying to help our community be more financially resilient.
When you become a member, you get access to competitive savings accounts, money management workshops, and a community that genuinely understands what it’s like to raise a family in London on a realistic budget. After your first successful loan, you might qualify for higher amounts in the future – up to £1,200.
Who can actually do this
The eligibility is refreshingly straightforward:
- Receive Child Benefit
- Live, work, or study in Southwark, Lambeth, Camden, or Westminster
- Or work in healthcare, education, or armed forces anywhere in Greater London
The key thing we look at is whether you can realistically afford the repayments alongside everything else you’ve got going on. We’re not interested in lending you money that’s going to make your life more difficult.
Taking the step
We get it – when you’ve been knocked back by mainstream lenders, it can feel disheartening to try again somewhere else. But this really is different. We believe that everyone deserves the chance to access to fair credit. Sometimes you need a bit of help to get through a rough patch, and sometimes that help can actually set you up to be stronger in the long run.
