Challenge
Expensive borrowing
Access to credit is still a challenge for a large number of people in the UK who don’t meet legacy scoring criteria. This includes young people and people from overseas who haven’t been able to build a credit profile, seasonal and gig economy workers, the self-employed, and those on low incomes.
As many traditional UK lenders tighten up affordability criteria, some individuals may be denied access to cost-effective borrowing, and default to using costly credit cards or overdrafts to boost their funds.
Solution
Cost-effective short-term credit
Using open banking data as part of the assessment process can provide lenders with additional, up-to-date financial insights that can help increase consumers’ chances to receive approval for loans and accurately evaluate what they can afford to repay.
It can also avoid the need for borrowers to provide unnecessary paperwork and speed up the decision-making process, which benefits both parties.
One specialist lender is even offering customers who decide to share their data a 1 per cent discount on the loan rate.
Other organisations can offer cost-effective credit to customers that would otherwise be excluded from borrowing, and even to employees in specific sectors, such as key workers.
