Experian and Leeds Building Society deal means Netflix subscription ‘could help’ mortgage applications
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Getting onto the property ladder in order to buy your first home might seem like an impossible task for many young people, with many struggling to build a good enough credit score to be granted a mortgage. But in a new partnership, subscription services like Amazon Prime and Netflix could be the saviour no one expected.
Leeds Building Society has teamed up with credit score company Experian, and will from today (May 10) factor in monthly costs like coffeeshop memberships and streaming subscriptions when setting credit scores. The new move could help young people show they’re financially responsible, which might help convince lenders considering a mortgage application.
When setting credit scores, the credit information company’s service Experian Boots will consider a user’s previous 12 months of regular debit payments, such as subscriptions to Spotify, and council tax, which can then contribute to a positive credit score which can then be factored into mortgage applications with Leeds Banking Society.
The new system is using open banking technology, which allows consumers to securely share their bank transactions with third parties used to set credit scores. According to the building society, 7.5 percent of applicants during testing would have gained an improved credit score by using Experian Boost.
Richard Fearon, chief executive at Leeds Building Society, said the new scheme would be particularly beneficial to young borrowers and those on lower incomes. He said: “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.
“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.”
Sigga Sigurdardottir, managing director of consumer services at Experian, said the new partnership with Leeds Building Society would help to “improve financial inclusion for consumers”.
This comes just days after Skipton Building Society launched its new deposit-free mortgage scheme aimed at people trapped in the “renting cycle”. The new offer lets young people apply for a mortgage without the need of a guarantor, just 12 months of on-time rental payments and a good credit history.