What is an Open Banking Credit Check?

What is an Open Banking Credit Check?

An Open Banking credit check is a type of credit assessment or credit check that uses data obtained from a consumer’s or business’ bank accounts and financial transactions, typically through Open Banking Application Programming Interfaces APIs (APIs). Open Banking credit checks provide lenders, financial institutions, or credit providers with a more comprehensive and up-to-date view of an applicant’s financial situation compared to traditional credit checks that rely solely on credit bureau data.

Here’s how an Open Banking credit check works:


To perform an Open Banking credit check, the individual or business seeking credit must provide explicit consent to allow the lender or a third-party service provider to access their financial data through Open Banking APIs.

Access to Financial Data

Once consent is granted, the lender or service provider can access the applicant’s financial data, including bank account transactions, balances, income and expenses. This data is retrieved directly from the applicant’s bank or financial institution.


The lender or service provider analyse the financial data to assess the applicant’s creditworthiness. They may consider factors such as income stability, spending habits, existing financial commitments and the overall financial health of the applicant.

Credit Decision

Based on the analysis of the financial data, the lender or service provider makes a credit decision. This decision can include approving or denying a loan, credit card application, or other forms of credit.

Risk Assessment

Open Banking credit checks can also help lenders to assess the risk associated with lending to a particular applicant. They may adjust the terms of the credit offer, such as interest rates and credit limits, based on their risk assessment.

Benefits of Open Banking Credit Checks:

The term ‘credit check’ can always seem a little daunting, both for the applicant and for the person carrying out the check as it’s often deemed as an additional admin task and an inconvenience to some. However, this doesn’t have to be the case. In fact, there are many benefits to having the option of undertaking Open Banking credit checks.

Comprehensive Data

Open Banking credit checks provide a more holistic view of an applicant’s financial situation, including real-time data on income and spending patterns.

Reduced Fraud

Accessing bank data directly through Open Banking APIs can help verify the authenticity of an applicant’s financial information, reducing the risk of fraud.

Financial Inclusion

Open Banking can help individuals with limited or no credit history establish creditworthiness by considering their banking data.

Faster Decisions

The real-time nature of Open Banking data allows for faster credit decisions, which can be beneficial for both applicants and lenders.

Improved Accuracy

By using up-to-date financial data, Open Banking credit checks can provide a more accurate representation of an applicant’s financial health compared to traditional credit checks.

It’s important to note that Open Banking credit checks are subject to data privacy and consent regulations and individuals or businesses must provide explicit permission for their financial data to be used for such checks. Additionally, Open Banking credit checks are typically used in conjunction with other credit assessment methods to make more informed lending decisions.

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