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New lender says no to credit-scoring

Intermediary-only Aldermore caters for borrowers rejected by mainstream lenders with trackers and fixes

Snowdon: ‘Major players dominate but they are all competing in the same space and credit score drives everything’
Snowdon: ‘Major players dominate but they are all competing in the same space and credit score drives everything’

New intermediary-only lender Aldermore says it will not take a “computer says no” approach and is not using credit-scoring to assess borrowers.

Speaking to Money Marketing, residential mortgage chief executive Colin Snowdon says Aldermore is targeting borrowers that may not meet mainstream lenders’ credit-scoring criteria but which it believes are still creditworthy.

The lender, which launched a range of residential and buy-to-let products on Monday, is funding its mortgage lending ent-irely through fixedrate savings accounts and cash Isas sold online. Aldermore has also been offering commercial loans for the past year.

It will cater for borrowers who are automatically rejected by mainstream lenders’ credit-scoring models. Rather than using credit scores, Aldermore says it assesses borrowers against a set of rules such as no county court judgments in the last 36 months.

Aldermore says that where borrowers do not satisfy its rules, underwriters will consider supporting evidence, whereas it says that, with credit scores, borrowers fail automatically if they do not meet the criteria.

The firm does not accept borrowers with missed mortgage payments within the last year but will consider borrowers with older missed payments if evidence is provided explaining why they occurred and showing that the issues have been resolved.

Aldermore’s residential range includes two-year trackers starting at 3.98 per cent and three-year fixed rates from 4.93 per cent. It will lend up to a maximum 80 per cent loan to value for residential and 75 per cent LTV for buy-to-let mortgages. It is distributing its products through 3mc, BDS, Legal & General, Mortgage Intelligence, Mortgages for Business, Mortgage Next, Pink, Platinum and Personal Touch Financial Services.

Snowdon says: “This is not sub-prime, they are cases that mainstream lenders before the credit crunch would have welcomed with open arms. I think what you have got is domination by the major players – people like Santander, Halifax, Lloyds, Nationwide – but they are all competing in the same space and credit score drives everything these days.

“Where we are going to be pitching our residential tent is for prime borrowers – not sub-prime or self-certification – but our proposition is going to be different. We are going to have a very good system of brokers and we are not credit scoring, it is a rules-driven approach. “We are employing skilled underwriters who will look at the cases, understand what is going on and make a sensible decision on whether it is right to lend to that customer. We will not be a ’computer says no’ lender.”

Snowdon says most lenders prefer to lend directly but Aldermore is committed to the intermediary market.

He says: “The people leading big lenders have got branch networks and if you put them on a truth drug, they would all say they would prefer that all their mortgage business came thr-ough branches. This tension disappears in a boom market and comes back in a depressed market. I guarantee that when the market has recovered, those lenders will not be so averse to lending through intermediaries.
“Our sole source of distribution is through intermediaries. We take that very seriously.”

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