A service which analyses financial data on renters and alerts them when they are eligible for a mortgage with Nationwide Building Society has been launched.
Tenants who are signed up to rent reporting platform, CreditLadder, who pay their landlord on time and meet criteria will be introduced to Nationwide about applying for mortgage on their first property.
How does it work?
The system uses open banking to analyse the income and expenditure of tenants. This information, which is collated by CreditLadder, is compared against Nationwide’s mortgage eligibility rules.
When a tenant who is signed up the CreditLadder platform is deemed, evidence of their financial transactions, to be a good candidate for a mortgage, they will be prompted and directed to discuss potential options with Nationwide.
Rental recognition
The initiative is one of a number of recent developments where open banking is being used to help would-be first-time buyers onto the property ladder.
At the end of last year, Experian announced rental payment information would appear on credit reports of more than 1.2 million tenants across the UK through its rental exchange scheme.
Using ‘rent recognition’ schemes to provide evidence of timely repayments of rent can help first-time buyers when applying for a mortgage as they provide proof an individual is reliable at paying regular, large sums to money.
Credit rating
Sheraz Dar, CEO of CreditLadder, explained tenants already using CreditLadder did to so improve their credit rating as well as increasing their chances of being approved for a mortgage.
He added: “With the service already live, the relationship is the first of its kind between a rent reporting service and a mortgage provider in the UK. Working with Nationwide Building Society is a key plank in our plans to help those who dream of owning their own home to realise their aspirations.”
CreditLadder was the beneficiary of funding from HM Treasury when it was chosen among the winners of the Government’s Rent Recognition Challenge to develop methods to help renters boost their credit scores.
Greg Michel, fintech and insurtech lead from Tech Nation, which is supported by the Government, said, “It’s great to see CreditLadder grow as a business and find yet another way to help people reach their life goals by improving their credit score. We are proud to have them as alumni of our first ever Tech Nation Fintech programme.”
