Households in areas where people are struggling to be accepted for affordable borrowing are being targeted by high-cost credit lenders.
A new report by Demos think tank, named The Good Credit Index, has identified 30 places around the UK where households have low credit scores and an increased need to borrow money - alongside a high percentage of high-cost lenders.
Low credit scores and high-cost lenders
Although these regions have access to banks, credit unions and building societies, some residents may be unable to use these services due to their low credit scores.
As a result of this, some may be more likely to turn to high-cost lenders for help, which has caused more loan sharks and payday lenders offering their services in these areas.
However, the think tank has explained that not all low-income areas have low credit scores and the need to borrow money, as some benefit from high levels of home ownership.
Alongside this, some middle-income areas can have extremely low credit scores, due to factors such as a high student population or unstable employment, which can make it more difficult to borrow.
Which areas are preyed on the most by loan sharks and payday lenders?
Fifteen of the local authorities were located in the North of England, and included cities such as Liverpool, Hull, Sunderland and Blackpool.
Dundee was the only place identified in Scotland, with none being identified in the South of England.
These the 30 local authority areas identified as being preyed on the most by high-cost lenders, according to Demos.
These towns and cities have the highest number of people with low credit scores, high concentration of high-cost lenders and a clear need for borrowing:
TorfaenLincolnBarnsleyDundee CityRochdaleSwanseaBlackburn with DarwenNottinghamHyndburnSouth TynesideBurnleyCorbyDoncasterSandwellStoke-on-TrentHaltonSunderlandCaerphillyLiverpoolWolverhamptonHartlepoolNeath Port TalbotRhondda Cynon TafNorth East LincolnshireKnowsleyBlackpoolMerthyrTydfilBlaenau GwentKingston upon Hull
Fifteen of the local authorities were located in the North of England (Photo: Shutterstock)
Author of the report, Sacha Hilhorst, said, "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.”
This article was originally published on our sister site, Yorkshire Evening Post.