How Open Banking is Changing Loan Affordability Assessments
Gone are the days when getting a loan was based solely on a lender’s profitability calculations and a quick glance at your credit report. Today, lenders take a more responsible approach by assessing whether you can realistically afford to repay a loan—an essential safeguard for both borrowers and lenders.
What is a Loan Affordability Assessment?
A Loan Affordability Assessment helps determine whether a consumer can comfortably repay a loan based on their financial situation. It goes beyond simply checking a credit score and considers key financial criteria, including:
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- Verification of income – Ensuring you have a stable source of earnings.
- Quality of income – Assessing the reliability and consistency of your earnings.
- Existing loans – Checking how many loans you currently have outstanding.
- Disposable income – Comparing your available income to the monthly loan repayment amount.
- Gambling habits – Identifying excessive spending on gambling, which could indicate financial risk.
- Bounced cheques or payments – Flagging instances of failed transactions due to insufficient funds.
Traditionally, borrowers had to provide bank statements or other documents to verify these details manually. But thanks to Open Banking, the process is now faster, more convenient, and more secure.
How Open Banking Makes Loan Assessments Easier
Open Banking allows consumers to securely share their financial data with lenders at the click of a button, eliminating the hassle of paperwork. ScoresMatter partners with trusted financial services like Consent Online and Equifax to facilitate this process. Here’s how it works:
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- Sign up for ScoresMatter – Create an account and access your affordability tools.
- Verify your financial details – Connect your bank account securely using Open Banking.
- View your affordability rating – See easy-to-read scores and indicators showing how lenders assess your financial health.
- Use the loan calculator – Check your likelihood of approval for different loan amounts before applying.
With Open Banking, consumers can better understand their financial standing, make informed borrowing decisions, and avoid loans they may struggle to repay. Lenders also benefit from more accurate insights, helping them offer loans responsibly while reducing financial risk.
Tap into The Digital You with ScoresMatter today and take control of your loan affordability.