Blog: The cost of being poor

Michelle Davitt
Michelle Davitt

By Big Issue Invest Scotland manager Michelle Davitt

It can be expensive to be poor. Big Issue Invest (the investment arm of The Big Issue) noticed a few years ago that people on low incomes typically pay more to borrow money, get credit cards, take out insurance and set up mobile phone contracts or hire purchase deals on white goods. Most people on a low income manage their limited money very carefully, yet they can face this kind of discrimination from banks, utility companies and other retail providers.

Save the Children refer to this as the ‘poverty premium’ – according to their analysis, people on low incomes can pay an eye-watering £1300 extra a year for basic goods and services (partly because they pay most bills in cash, rather than setting up direct debits). In effect, it costs you more to be poor in our society.

BII carried out further research into this issue, and realised that one of the issues was that the rent payments of social housing tenants are not treated in the same way as mortgage payments.

The Rental Exchange was set up to help tackle this area of financial exclusion by:

  • helping social housing tenants achieve a better credit score, which in turn can allow people to buy goods like a new fridge or cooker at a lower interest rate;
  • by accepting regular payments of rent as evidence of good credit behaviour, the scheme aims to ‘level the playing field’ and give social housing tenants access to the type of low-cost, mainstream credit that is already available to mortgage-payers.
  • BII partnered with Experian, the UK’s leading credit reference agency, to help give this boost to social housing tenants’ credit history. Currently:

    • More than 75 social housing providers from across the UK have joined the initiative
    • The Rental Exchange is now helping 1 million tenants to build their credit scores.
    • A number of Scottish housing providers are already on board.
    • The Rental Exchange is completely free of charge for social housing providers to join.

      Big Issue Invest Scotland are linking with the housing sector to promote and implement The Rental Exchange across Scotland. We’re also talking to umbrella bodies, people working in financial inclusion, tenants and anyone else who’s keen to know more.

      If you’d like more info, please contact BIIS Manager Michelle Davitt on 07572 058 368 or email We can send you details to log on to the online information hub which has loads of info and resources, we can meet with you and we can come and do a presentation to tell your staff, management, board or tenants more about The Rental Exchange. Get in touch!

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