If you have a low income or poor credit, then you may be at genuine risk of financial exclusion. If this happens, you will not be in a strong position to get credit or other financial products that may benefit you and your family. Check out our information below to find out what financial exclusion is and how to try and avoid it.
What Is Financial Exclusion?
The term financial exclusion means that an individual is not able to get access to a wide range of banking services due to being on a low income or being financially dependent on another person. This status is widely condemned as it is believed to be one of the main reasons that people are unable to get themselves out of poverty.
If you are financially excluded, then you will not be able to access any credit facilities or bank accounts that offer higher levels of interest. Many people who are financially excluded find it hard to open a bank account and often are only able to get basic accounts for money to go in and out of.
What Happens if I am Financially Excluded?
If you are financially excluded, you will find that you are not able to access financial products and accounts that may benefit you. Instead, you will need to use a basic account in the hope that you can build or rebuild your credit score as time goes by.
Sadly, financial exclusion can have a profound impact on a person, and it is commonly reported that people who are financially excluded often feel hopeless, humiliated, and at-risk or having their money and belongings taken because they are unable to store them securely with a financial service.
If you are financially excluded, and it is causing you to feel this way, then it is important that you seek help and support from charities and agencies that have been set up for this purpose.
How Can I Avoid Financial Exclusion?
If you want to avoid financial exclusion, then the first thing you will need to do is get a bank account, even if it is just a basic account or a prepaid account. When you have an account, you can slowly build up your credit score by ensuring all your payments are made on time. Eventually, your bank and other banks will consider whether to upgrade your account, and this will be based on how well you manage your finances.
If you are struggling to get a basic bank account, then it is well worth looking off the high street. Many modern style banks are keen to provide bank accounts to those that need it, and you will often get far better service than you would get from a traditional bank.
Financial exclusion is a real problem for many people in the UK who are on a low income or who have no independent income of their own. In reality, if you are financially excluded, then you will not be able to access the finance products you need to be able to improve your personal circumstances and so it is important to follow the steps listed above to try and avoid financial exclusion.