First-Time Buyers To Face More Hardship With Changes In Credit Checks

Wed, 23 Jan 2008

Changes to the use of student loan data will make it harder for first-time buyers to get on the housing ladder, according to online mortgage company mform.co.uk.

Later this year, information relating to student loans will be incorporated into people's credit files, meaning any missed payments to the student loan company will show up as a black mark on credit ratings.

With mortgage lenders' set to tap into student loan data for credit checks, mortgage approvals for those with outstanding debts and any defaults on loan repayments – typically those in the first-time buyers bracket (aged 29 and under) - will be greatly affected.

Mform.co.uk says that plans to include people's details of their student loan debts in their credit files are unfair due to the nature of only including missed or defaulted payments . Therefore, any details of how a student has made their student loan repayments - which would largely have a positive impact on their credit rating - will be bypassed.

Francis Ghiloni, marketing and business development director at mform.co.uk said: "The average student can face debts of over £20,000 by the time they graduate, and their average starting salary is around £16,000."

"Given statistics like this, many students miss one or more of their student loan repayments, and this information will soon be made available to credit reference agencies and therefore the banks and financial services companies that use them."

"If they can see a history of missed payments here, they are likely to be less willing to lend you money ."

The Government has not yet announced a date for when it plans on providing this data to UK credit reference agencies.
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