Open Banking: First Time Buyers’ Mortgage Hopes Helped by Leeds Building Society, Experian

Aspiring homeowners can improve their chances of getting on the housing ladder thanks to Open Banking and “to extra evidence of a borrower’s good financial track record being factored into mortgage checks by a leading lender.”

Leeds Building Society has reportedly “become the first UK mortgage provider to partner with Experian and connect to its free Experian Boost service.”

It means “the last 12 months’ of regular debit payments, council tax and subscriptions to digital entertainment services like Netflix or Spotify, can now contribute to credit scores and be factored into mortgage applications to Leeds.”

The service “uses open banking to link the borrower’s current account payments to their credit score which is then connected to the Society’s lending systems.”

During testing, 7.5% of Society applicants “would have gained an improvement in their credit score by using Experian Boost.”

No credit scores “are ever reduced as a result of Boost.”

Leeds Building Society “has more than 800,000 customers and last year it helped 18,000 people onto the housing ladder for the first time.”

It lends “up to 95% of the value of a home both for outright purchase and shared ownership mortgages, applications for which will also be eligible for boosted credit scores.”

Last year the Society “stopped lending on residential second homes to focus on first time buyers and also published a series of public policy proposals to address the homeownership crisis.”

Richard Fearon, Chief Executive at Leeds Building Society, said:

“We’re proud to be the first mortgage lender in the UK to make it easier for aspiring homeowners by incorporating free, ‘boosted’ credit scores that include regular payments. This will particularly help younger borrowers, first time buyers and anyone on lower incomes who face the toughest challenge to prove their ability to repay. Often through no fault of their own, these groups can struggle to build a good credit score because they need to spend most of their earnings on rent and other regular payments.”

As noted in the update:

“Housing is at its least affordable point since our founding year in 1875, a sad indictment of decades of inertia over the UK’s housing crisis. But we will continue to find ways we can help and put homeownership within reach of more people, just as we have for almost 150 years. It is no coincidence that a building society is the first to offer this service – we were the original homeownership pioneers and I’m delighted we’re maintaining that tradition.”

Sigga Sigurdardottir, Managing Director, Consumer Services at Experian, said:

“Our partnership with Leeds Building Society further supports Experian’s mission to improve financial inclusion for consumers. As many people across the UK face barriers to homeownership, we’re delighted that Boost users can now use their boosted scores to help them get on the ladder, making that dream of home ownership more accessible for people across the UK.”

Customers can “opt-in and out of the boost service at any time and the service is completely free.”

As clarified in the update, the option to include Experian Boost in credit scores “with Leeds Building Society currently relates to residential, single applicant mortgage applications only.”

The option “to include Experian Boost in credit scores with Leeds Building Society currently relates to residential, single applicant mortgage applications only.”

As mentioned in the announcement, not all credit scores “will increase with Boost, but it will never cause a credit score to go down.”

As mentioned in the update, Open Banking is “an initiative that allows consumers to share their bank transactions with FCA authorized third parties via a safe and secure connection. Data cannot be shared without the consumer’s explicit consent.”

The aim of Open Banking is “to drive innovation in the quality of products and services that people can access. ”

As explained in a blog post, Open Banking “uses APIs – or Application Program Interfaces – which are technology that allow banks and other companies to conveniently and securely share data between their organizations. ”

The Experian Credit Score is reportedly “based on the information in their Experian Credit Report, such as how many credit accounts they have and how much credit they use as a percentage of their credit availability.”

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