The aim is to help people who have limited eligibility for mainstream loans to avoid high interest payday loans and illegal loan sharks.

Experian has found that about 25% of customers searching for loans through its comparison services are not eligible for loans from mainstream lenders.

It warns that people seeking credit who are not able to find an offer through mainstream providers may end up getting high cost loans, for example from payday loan companies.

Providers signed up to the initiative include three community lenders: Manchester Credit Union, Scotwest and Scotcash. Experian is in discussions to bring more lenders on board.

The credit reference agency is working with technology supplier incuto to integrate the participating community lenders onto Experian’s comparison platform.

With many people struggling financially following the pandemic, the initiative aims to provide financially excluded consumers with access to affordable credit from non-profit institutions. All rates offered by these community lenders will be much more favourable than high-cost alternatives such as illegal loan sharks.

Clive Lawson, managing director of Experian Consumer Services, said: “The financial impact of coronavirus is a worry for many of us and Experian is committed to supporting financial inclusion, especially during these challenging times. That’s why we are giving our customers another option if they are ineligible for credit offers from traditional providers.

“When a customer is unable to access mainstream credit from lenders, some feel as though they have no other option but to pursue other means such as payday loans or even illegal loan sharks. These products often have very high interest rates and can be structured differently from mainstream offers, which can make it more difficult to calculate the cost of credit and increase the chances of customers spiralling into debt. This innovation with incuto to offer our customers credit options from not-for-profit community lenders provides a much-needed alternative.”