People looking to buy their first home could get a helping hand from subscriptions to things like Netflix and Spotify under a new partnership that’s been launched today (10 May).
Leeds Building Society and credit score company Experian have announced these monthly costs will be factored into the credit scores lenders consider when considering a mortgage application. The move could make it easier for people to show they are financially reliable.
It comes after Skipton Building Society announced on Tuesday (9 May) it would be rolling out a no-deposit mortgage product. The deal, which will also be contingent on a good track record with regular bills, could help people struggling to break free from renting to get onto the housing market.
But it also follows news that average house prices remain close to record levels. Research by property listing company Rightmove has found asking prices for first-time buyers are also now at a record high.
With inflation currently eroding prospective buyers’ deposits at a rapid rate, and high mortgage rates driving up borrowing costs, affordability has become a big issue for people hoping to buy their first home. Rents have also been rapidly increasing across the country.
Experian Boost service ‘to factor’ in mortgage decisions
Leeds Building Society has partnered up with Experian’s ‘Boost’ service - a program that allows extra evidence of someone’s solid financial track record to be factored into lending decisions.
This extra evidence will include regular debit payments over the 12 months leading up to when Leeds Building Society checks the person in question’s credit score. As well as council tax, it means monthly bills like Netflix, Disney+ and Spotify will now count towards someone’s credit rating and play a direct role in a mortgage application with the building society.
At present, lenders tend to look at an applicant’s income, employment status, and overall financial stability, as well as a general credit score based on things like how much you owe to other lenders and whether you’ve ever been bankrupt. This score includes utility bill payments, but tends not to factor in ‘non-essential’ payments, such as those to streaming platforms.
It means the inclusion of this additional information could sway a lender into favouring borrowers who may have otherwise been rejected. According to Leeds Building Society’s analysis of tests it has conducted on Experian’s service, 7.5% of mortgage applicants would have gained an improvement in their credit score.
Under the new partnership, Leeds said not all of its applicants’ credit scores would increase. But it added that Experian Boost would never cause a credit score to go down. It will allow customers to opt in and out of the scheme at any time. Boost will apply to anyone seeking out residential, single-applicant mortgage applications with dual applicants set to benefit “soon”.
Leeds-Experian deal will ‘boost home ownership’
Explaining their new deal, both Leeds Building Society and Experian said they hoped it would help more people to access the housing market. Leeds has been focusing on first-time buyers since 2022 when it stopped lending on residential second homes.
Richard Fearon, chief executive at Leeds Building Society, said the new announcement would particularly benefit 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.”
Experian’s managing director of consumer services, Sigga Sigurdardottir, said the firm’s partnership with Leeds Building Society would help to “improve financial inclusion for consumers”.