Open Banking – What is it and how could it revolutionise Car Finance
What is open banking?
Simply put, open banking means that all UK-regulated banks have to let you share your financial data such as your spending habits, monthly payments and businesses you use (this includes your bank statements, credit card bills or savings statements) with authorised providers offering budgeting apps, or other banks, as long as you have granted them permission.
Open banking allows you to use the power of the information you already own to leverage greater access to financial products and services. Your bank accounts hold a wealth of important information that show how you manage money.
What’s the difference between open banking and my credit score?
Lenders usually take into account three main when deciding to offer you car finance. They are stability, ability, and willingness. Your credit score can really only indicate willingness. And even then, it’s not precise. By using open banking, it gives potential lenders a better idea of your financial history and behaviours.
This means lenders can take into account your income and outgoings, how often you go into your overdraft, whether you save often, keep up with any direct debit payments or spend in high-risk areas like gambling.
How can open banking help me buy a new car?
Open banking frees you from being constrained by your credit score and can help lenders find finance options for consumers who would otherwise be denied credit.
Is open banking safe?
Security is a key component of open banking. It uses rigorously tested software and security protocols to ensure your personal information is safe. You will never be asked to give access to your bank login credentials or password to anyone other than your own bank or building society.
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