Interested homeowners can now subscribe to services such as Netflix or Spotify, following a new partnership between Leeds Building Society and credit information company Experian.
Leeds Building Society has joined Experian’s free Experian Boost service.
The service allows additional evidence of a borrower’s good financial track record to be incorporated into lending decisions.
This means regular debit payments from the past 12 months, such as council tax and subscriptions to digital entertainment services such as Netflix or Spotify, can now contribute to credit scores and be included in mortgage applications to societies.
Open banking technology, which allows people’s information to be shared securely, sits behind the initiative. Open banking is used to link a borrower’s current account payments to their credit score.
This is then linked to Leeds’ loan system.
Open Banking is an initiative that allows consumers to share their bank transactions with Financial Conduct Authority-authorized third parties through a secure connection. Data cannot be shared through Open Banking without the explicit consent of the customer.
Leeds Building Society said that during the trial, 7.5% of applicants to the society would have improved their credit scores using Experian Boost.
Leeds is not the only lender to have unveiled an innovative way to potentially accelerate the home ownership dreams of some first time buyers.
On Tuesday, Skipton Building Society announced a new zero-deposit mortgage deal for renters who aspire to be first time buyers.
Skipton said tenants aged 21 and older may be able to secure a mortgage of between 95% and 100% of the value of the property they wish to buy.
In return, they will need to demonstrate a strong track record of paying their rent, with at least 12 months of rental history, as well as evidence of passing affordability and credit checks.
The Skipton Track Record mortgage is a five-year fixed-rate product with a rate of 5.49%, and a maximum mortgage term of 35 years.
Leeds Building Society has over 800,000 customers and last year helped 18,000 people onto the housing ladder.
It lends up to 95% of the value of the home for both outright purchase and shared ownership mortgages, applications for which will also be eligible for enhanced credit scores.
Last year, Leeds stopped lending on residential second homes to focus on first time buyers.
Richard Fearon, chief executive of Leeds Building Society, said of the new announcement: “This is particularly important for young borrowers, first time buyers and anyone on a low income facing the toughest challenge of proving their ability to repay. will help.
“Often through no fault of their own, these groups can struggle to build a good credit score because they need to spend a majority of their earnings on rent and other regular payments. In fact, the majority of existing Boost users are renters. Are.
“Housing is at its least affordable point since our founding year in 1875, a sad indictment of decades of inertia on the UK housing crisis. But we will continue to find ways we can help and bring home ownership to more people deliver, as we have for almost 150 years.”
Sigga Sigurdardottir, Managing Director of Consumer Services at Experian, said: “Our partnership with Leeds Building Society supports Experian’s mission to improve financial inclusion for consumers.
“As many people across the UK face barriers to home ownership, we are delighted that Boost users can now use their enhanced scores to help them get on the ladder, making it easier for people across the UK to own a home. The dream of home ownership becomes more accessible.”
In addition to credit score, there are other factors considered by lenders when assessing an individual’s mortgage application, such as their income, employment status and overall financial stability.
The Experiment Boost could provide an additional layer of information, potentially tipping the scales in favor of some borrowers who might otherwise have been denied.
The option to include Experian Boost in Credit Score with Leeds Building Society currently only relates to residential, single-applicant mortgage applications. Leeds said dual applicant boost scores are going live soon.
Not all credit scores will go up with Boost, but it will never cause a credit score to go down, said those behind the initiative.
Leeds Building Society said customers can opt in and out of the Boost service at any time.