Navigating the mortgage application process for first-time home buyers can be daunting, especially when trying to build and improve your credit score and history. To address this challenge and empower aspiring homeowners, Leeds Building Society has joined forces with Experian to introduce a ground-breaking, free initiative: Experian Boost.
In this blog, we will take a look at this innovative credit scoring system, and explore how it is set to revolutionise mortgage accessibility.
Experian Boost is a free service adopted and integrated by the Leeds Building Society. It represents a pivotal shift in traditional credit scoring. Unlike conventional models that solely rely on credit history from lenders, Experian Boost takes into account an individual’s regular, direct debit payments. This means that your monthly payments for utility bills, rent, Netflix, mobile contracts, Council tax, and Spotify (as examples) from the past 12 months can now contribute to your credit score, positively impacting it.
For many first-time home buyers, building a robust credit history from scratch can be a considerable challenge. Without a significant borrowing history, lenders may hesitate to offer favourable mortgage terms or, in some cases, approve the application at all. Experian Boost changes this by taking into account regular payments and using that information to provide them with a comprehensive overview to boost credit scores. This can be especially beneficial to those who have limited financial histories and are committed to managing their finances responsibly.
With Experian Boost in place, first-time buyers can substantially improve their credit profiles, making them more attractive to lenders. By incorporating additional payment data, this new credit scoring system provides lenders with a more comprehensive and authentic view of an individual’s financial behaviour. This added insight allows lenders to make better-informed decisions when assessing mortgage applications, resulting in increased eligibility rates for first-time buyers. According to the Leeds Building Society, “during testing around 7.5% of applicants would have gained an improvement in their credit scores by using Experian Boost,” making home ownership a reality for more people.
Securing a mortgage at a competitive interest rate is crucial for long-term financial well-being. First-time buyers often face higher interest rates due to them being perceived as higher risk applicants. Experian Boost changes this completely by showing a higher credit score. These buyers can now access more favourable interest rates, potentially saving thousands of pounds over the life of their mortgage. This financial advantage not only makes homeownership more affordable, but also is the foundation to building overall financial stability.
The dream of owning a home may seem unattainable for some first-time buyers, given the hurdles of the mortgage application process, which might be faced if you:
Experian Boost, in conjunction with Leeds Building Society’s commitment to empowering homebuyers, removes some of these listed obstacles for you. They are creating a clear path to homeownership.
According to Richard Fearon, Chief Executive at Leeds Building Society, “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. It’s 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.”
Connecting to Experian Boost does not harm your credit score, but, while connected, your score could still drop due to common reasons such as maxing out your credit card, missing payments, and/or borrowing more than you can afford.
Experian Boost is created to help as many people as possible. To use it, you need a Free Experian Account, a current account with a bank or building society that supports Open Banking access for customers. It is important to know that there are some account types that do not qualify, such as savings accounts. Thus, if you’re thinking of signing up, give us at Charters a call before doing so. We can advise and help you through the process.
Customers can sign-up and opt out of Experian Boost at any time, and the service is completely free, as mentioned above.
As we look ahead, Experian Boost’s positive influence on first-time buyers is a driving force to creating a more inclusive and accessible housing market for everyone. If you’d like to find out more information, feel free to contact us anytime. Our dedicated team of property experts are here to help.
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