Open Banking Credit Check

Open banking seems to be helping push forward innovation in the banking sector. Despite the major banks being slightly hesitant to move forward, it seems that the overall shift in mood has already happened, and everyone is starting to, more or less, embrace open banking. One of the largest benefits of this concept is the ability to quickly verify creditworthiness. This can mean even faster access to credit and loans as well as more opportunities to start a business or even quicker tenancy verifications. But how does open banking credit check work?

Benefits of Credit Check via Open Banking

Open banking allows (with your consent) access to your financial data for regulated third parties. They usually gather that information or pass it to whoever can provide some kind of financial service to the customer.

In reality – doing open banking credit check is just a matter of a few clicks. Open banking APIs are able to collect all of your financial data from multiple accounts and can analyze it in order to make risk assessments and/or find suggestions for money management and budgeting. In this case, however, credit checks are done by evaluating your income, current monetary situation, and existing active liabilities.

In addition, the bank or the loan company could ask for employment verification via another platform, but sometimes the bank has a feature that’s already integrated, and you only need to approve consent for a credit check. All of your data is processed within seconds. Open banking has allowed financing companies to implement AI-based software that’s able to make more informed and human-error-free decisions in a matter of seconds. Hence, people can expect to hear the verdict very quickly after applying for credit.

Furthermore, when it comes to tenant referencing, open banking also plays an important role, helping property owners find more dependable tenants and to tenants, prove their eligibility to property owners. This avoids annoying and time-wasteful bureaucracy that would hamper tenant referencing in the past. Tenants do not need to gather different stamped papers from different sources. It’s all automated now.  

Open Banking – Account Credit Check in the UK

It’s also worth mentioning that as of right now, it seems that the United Kingdom is the global leader in implementing open banking credit checks. If a few years back everyone would’ve wondered ‘what is an open banking credit check?’, today more and more people are using it for tenant referencing and many more financial products/services.

The legislature and regulations for the UK are very similar to what you’d expect to find in the UK. However, in terms of implementation, the EU and other PSD2-adopter countries have it implemented to very different degrees. Due to technical or other limitations, many member countries have not been able to implement open banking credit checks. That’s not a problem in the United Kingdom where it has been working for a while now.

It seems that the list of available checks and verification through open banking should expand. Insurance, business operations seem like the first in line.

Get started now!

No trial period. No credit card. Free forever.

Join our Newsletter

We frequently share industry news and Nordigen product updates to our closest friends, fintech innovators and industry experts. Sign up to our newsletter to hear more from us.

By providing your email, you accept
Nordigen's Privacy Policy.