A popular option is local lenders such as Provident Personal Credit, which has a history of lending to disadvantaged families. These companies have local branches and collectors go from door to door on a regular basis. Another alternative is the government-run Social Fund, which allows the poor to borrow money for essentials against their benefits. By far the best option is a credit union, although these are still thin on the ground, especially compared to many of the 80 other countries where they are active. There are currently 672 credit unions in the UK with about 270,000 members, according to Abcul - the Association of British Credit Unions.
Credit unions are financial co-operatives where members save into a common fund.
Members can then call on the fund for low-interest loans. The borrower pays nothing for insurance and there is no loan arrangement fee. The unions are established around a common bond, usually a community or a group of workers. British Airways staff have one of the biggest and credit unions in the country. But tough government restrictions are believed to have hampered widespread growth of credit unions.