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Think stated that 41% of people have been denied credit due to the inability to verify identity or legal status, and 35% have been denied due to the inability to access payment history. Furthermore, 33% of self-employed workers say their employment status has been an obstacle for them getting a mortgage, while 31% believe it has hampered their ability to obtain credit.
Tink stated that many people are being excluded from credit due to outdated and blinkered credit scoring models. It added that traditional credit checks means there is no robust way of protecting consumers if economic circumstances change and affordability becomes an issue.
Tink UK and IE Banking and lending director Tasha Chouhan said, “It’s clear many lenders still rely on traditional credit checks to determine eligibility for loans. There is no place for such models in our current economic climate, and the sooner this is recognised, the better the outcome will be for both lenders and consumers.
“New forward-looking models are drawing on open banking technology to provide a holistic picture of people’s finances. It’s vital to protect potentially at risk or vulnerable consumers from problem debt or default as the economic climate worsens. At the same time, it’s key to promoting financial inclusion, as people now more than ever need access to safe, affordable, and regulated borrowing options.”
From Traditional lending models not ‘fit for purpose’ – Tink claims.
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