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Aldermore: Tick box mortgage underwriting rejects thousands of worthy applicants
01 September 2010
New bank Aldermore said UK banks are using credit scoring as a "blunt tool" to turn away borrowers in their thousands. Banks have raised the credit scoring bar, said Aldermore, meaning creditworthy borrowers are regularly rejected because tick box underwriting rejects those with recent job moves, multiple income streams or self-employment and little credit history. Research from Aldermore revealed 60% of brokers said up to 20% of clients had been turned down because of credit scoring. Colin Snowdon, chief executive of Aldermore's specialist mortgage lending business, said the figures showed lenders are too reliant on technology after sloughing off so many skilled staff during the recession. "They now have no other way of sorting the wheat from the chaff," said Snowdon. He warned that the two-thirds of borrowers on variable rate mortgages could suffer payment shock when rates finally rise because they won't fit lender's credit scores to remortgage. "Lenders should take into consideration all the facts presented to them by an applicant and not use a minor blemish, such as a missed credit card payment several years ago, as a reason for rejecting perfectly creditworthy applicants," said Snowdon. Published by Mortgage Solutions
