Here’s an Example of How Open Banking is Already Turning Heads
Attempts have been underway in Parliament recently to help tenants improve their creditworthiness. This includes new legislation to make lenders give rental payments the same weight as mortgage premiums, including most recently Big Issue founder Lord Bird’s draft Creditworthiness Assessment Bill.
Open Banking - ahead of any future legislation - offers tenants the potential to achieve improved creditworthiness at no extra cost.
The launch of Open Banking in the UK last month, backed by nine key UK banks, is now enabling renters who want to get a mortgage to improve their creditworthiness with an ease that would have been unimaginable only a year ago, says CreditLadder.co.uk.
Instead of onerous paperwork or agent/landlord permissions - as has been the case in the past - tenants are now able to report their rental payments via mobile/online platforms simply, quickly and for free.
Tenants tell their bank they want the platform to ‘read’ their rental payments and pass this information on to a credit reference agency, such as Experian.
“When we launched our Open Banking service last month we were acutely aware that the take up maybe held back given the newness of the technology,” says CreditLadder CEO Sheraz Dar.
“But so far Open Banking is proving popular with our customers. The number of people signing up to our service has doubled and last week 80% of those applying to join our service now do so via Open Banking.
“Many of the UK’s 11 million private renters are finding it harder and harder to get on the property ladder, so it’s no surprise that a service like ours which gives them a leg-up is proving popular.
Case study
Civil Servant Ian Cuthbertson, 33, from Norwich is the first person in the UK to sign up and register his rental payments with a credit agency using CreditLadder’s Open Banking service, which is provided through an FCA-regulated partner.
Ian pays £700-a-month for a two-bedroom barn conversion he shares with his partner on the outskirts of Norwich, payments that are now being added to his credit history via CreditLadder.
“My partner and I are planning to buy a home in a few years’ time so I’ve been realising more and more that I need to improve my chances of getting a mortgage,” he says.
“So I’ve been looking at how I manage my credit cards and trying to make little tweaks here and there to my finances so that I present myself as trustworthy to lenders.
“I was thinking to myself that I pay the rent on time every month and wondered if that could count towards my credit score. And then I saw an article on MoneySavingExpert.com about CreditLadder so I decided to sign up.
(Source: CreditLadder)
