Payday loan history threatens mortgage applications
Borrowers risk having their mortgage application rejected if they have recently taken out payday loans, regardless of whether it was paid back.
Lender GE Money confirms that it will no longer consider applicants who have taken out a short-term, high-interest loan once in the past three months or more than twice over the past year.
A spokesman for GE Money says: “As a responsible lender in a challenging market we review a range of data to make prudent mortgage lending decisions. Payday loan data is one of many items included in this review and if a mortgage applicant has a current or had a recent payday loan, it is unlikely that we will consider their mortgage application.”
Companies specialising in credit checks have increasingly come under pressure to highlight payday loans on customer credit checks.
Global information company Experian now specifically lists payday loans separately in a departure from the previous practice of providing a more generalised overview of borrowing history.
Experian confirmed that, due to the short term nature of this lending, with many accounts opened and subsequently satisfied within a relatively short period of time, the industry was pushed to call for this information to be presented separately.
It says this information had been available to members of the data sharing scheme Credit Account Information Sharing since earlier this year but would not confirm how many currently request it.
Have you had any clients who’ve had their mortgage rejected as a result of taking out a payday loan? If yes, leave your comment below or email firstname.lastname@example.org.