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Banks, building societies and finance houses not only share repayment information about their customers, but can now also receive insight about the net worth of buy to let investors.
Credit reference firm Experian is opening up house price data by teaming up with property portal Rightmove to offer lenders the new Equity Check service.
Experian is marketing the service as a credit control tool to manage underwriting through to dealing with bad debts.
The data is a cost effective means of evaluating an entire credit portfolio, and can help assess the likely impact of house price changes and interest rate increases on customers’ equity positions and ability to afford credit.
Nick Evans, head of customer management at Experian UK said: “Equity Check has significant risk management benefits by providing another layer of insight into a customer’s overall financial position. This information will enable lenders to make even more informed lending decisions.”
Experian also offers a ‘tip-off’ service for lenders and insurance companies that flags when an owner changes the use of their property – for instance moves out to start letting.
These moves are seen as a direct response to buy to let mortgage fraud revealed in the credit crisis.
Combating fraud benefits everyone, the quicker fraud can be reduced the more confidence lenders will have to return to lending again. Competition for new business between lenders will intensify and when that happens you can expect pricing to improve and loan to value’s (LTV’s) to edge back up again too. The Money Centre welcomes this initiative.
Some firms have criticised the Equity Check service on the basis that firms making money out of exploiting personal data held by others without revealing their actions being unethical.
The Information Commissioner’s Office, responsible for policing data protection laws said: “If a consumer signs a waiver to sharing personal data, then this type of service does not break any rules.”
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