First Time Buyer
How Netflix and Spotify could now help first-time buyers get a mortgage
The service means that the last year of regular debit payments, like council tax or subscriptions to Netflix or Spotify, will be included in credit scores and therefore be used in mortgage applications with the lender.
The offering uses open banking to link the borrowers’ current account payments to their credit score, which is then connected to Leed’s lending systems.
Leeds Building Society said that during testing around 7.5% of its applicants would have gained an improvement in their credit score by using Experian’s boost service.
Experian says that using its boost service can improve credit scores by up to 101 points.
Customers can opt in or out of the boost service at any time and it is free.
The lender has over 800,000 customers and last year helped around 18,000 first-time buyers onto the property ladder.
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.
“This will particularly help younger borrowers, first-time buyers and anyone on lower incomes that faces 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. Indeed, the vast majority of existing boost users are renters.”
Affordability struggle hardest for decades
He said that housing is at its least affordable point since the Building Society was founded in 1975, which he said was a “sad indictment of decades of inertia over the UK’s housing crisis”.
Fearon said that he would continue to find ways to “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,” he noted.
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 scores to help them get on the ladder, making that dream of home ownership more accessible for people across the UK.”