Residential mortgage lender Gen H has extended its internal credit criteria in a move designed to support more first-time buyers who may have experienced minor issues on their credit file.

The lender says changes to its credit score threshold mean that around one in six decisions in principle that would previously have failed on credit score grounds are now expected to pass.

Gen H argues that while credit scoring is commonly used by lenders as a quick way to assess risk and creditworthiness during underwriting and that this works well for applicants with clean credit histories, it can unfairly disadvantage borrowers with thinner credit files or isolated historic issues.

In the current cost of living environment, the lender notes that more applicants are presenting with minor credit blips that are not reflective of ongoing financial difficulty. These can include a missed payment or a one-off utility bill default, sometimes recorded in error during a change of rental accommodation.

Although such incidents may have been resolved, they can still have a lasting impact on a borrower’s credit score. For first-time buyers in particular, this can restrict access to mortgage finance despite otherwise affordable and sustainable circumstances.

Gen H believes that rigid reliance on credit scoring can result in creditworthy borrowers being unnecessarily excluded, and says its revised approach will allow greater use of human judgement within the underwriting process.

Pete Dockar, chief commercial officer at Gen H, said: “Credit scores are a simple, helpful tool for those with clear credit to demonstrate their track record of responsible money management.

“But when there’s a thin file, or if there have been a few isolated issues in the past, it’s better to have a human take a look at the case and form their own judgment on the best path forward.

“These positive changes empower our lending team to help even more people find a sustainable route into homeownership.”