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‘Computer says no’ culture holding back housing market, says Aldermore

Nearly nine out of ten brokers’ say their clients are being regularly turned down for mortgages by automated credit scoring systems.

According to Aldermore, the UK housing market is being held back because of banks’ and building societies’ reliance on computers rather than skilled underwriters to assess mortgage applications.

It surveyed 200 mortgage brokers throughout the UK and found that 88 per cent of clients were regularly declined by lenders’ automated credit scoring systems.

Six out of ten brokers said up to 20 per cent of clients had been turned down because of credit scoring and a further 29 per cent said more than 20 per cent of clients had been told ‘no’ because they failed to achieve a sufficiently high credit score.

Aldermore chief executive Colin Snowdon says: “Lenders, most of whom let skilled staff go during the recession, are now overly-reliant on technology to make important lending decisions. They now have no other way of sorting the wheat from the chaff. Perfectly creditworthy borrowers are being told ‘no’ on a regular basis.”

Snowdon says reasons for being denied include not being on the electoral role because of a recent house move, a recent job change, minor historic credit issues that have been resolved, living in rented accommodation or never having had a loan or credit card. He says people who are self-employed and those who have income from several sources were also rejected.

Snowdon says: “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.”

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