Credit Rating Agencies Cause Borrowers to Miss Out Mortgage Deals

A recent news article published by The Times suggests that despite the efforts made by UK building societies and banks that are constantly reducing mortgage interest rates trying to meet their lending targets by the end of 2009, many borrowers are still unable to get approved for mortgages as credit reference agencies oftentimes provide lenders with incorrect data.
The Information Commissioner’s Office – a UK public body responsible for promoting “public access to official information” and protecting “personal information” – reported that the number of complaints about credit ratings agencies increased dramatically as many borrowers are missing mortgage deals because their applications get either declined or delayed as a result of numerous mistakes on credit files; at the same time, borrowers accuse banks and building societies of inadequate checks that are only based on the data provided by credit rating agencies.
Mortgage brokers share the concern of UK borrowers, as they also report increases in the number of declined applications due to mistakes made by credit rating firms.
Let us remind that in the past month a number of UK high street lenders reduced their mortgage interest rates in an attempt to meet lending targets. As such, Royal Bank of Scotland reduced the interest on its 2-year tracker to 2.99%, while Woolwich cut administration fees on its fixed mortgage deals by £300, to £199. At the same time Abbey and Alliance & Leicester reduced interest rates on a number of mortgage offers by 0.2%.
Despite the fact that UK lenders claim they are committed to giving out more mortgage loans, they are letting themselves down by the process of credit scoring, says Mr. Ian Gray, a mortgage broker. Meanwhile, credit rating agencies, on which the vast majority of British lenders rely when assessing borrowers’ credit histories, have 28 days to react to consumers’ queries; the “response”, however, might come in form of a holding letter.