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Using automated income, employment data can grow pool of potential borrowers.

Using the Cloud for Income and Employment Verification

While traditional credit scores remain a strong indicator of creditworthiness, today’s consumers may be more complex.

In a recent Equifax survey, nearly 40% of dealers said they still are not investing in more digital resources for their retail and lending processes. Of this group, about 31% said they 'don't have the resources to invest more, 40% said they do not feel comfortable with the technology, and 29% said they are comfortable with the digital business 'they're currently getting.

These dealers and lenders may want to reconsider, especially in 'today's highly competitive environment. 

Today's consumers are savvier than ever before and have high expectations when they embark on the car-buying journey. They don't necessarily compare different lenders or dealers anymore; they compare experiences. With so much of 'today's shopping done digitally, lenders and dealers need to consider ways to provide the level of service consumers expect at every stage of the journey, from finding the right car to financing it.

Digital Transformation Is More Than Speed and Compliance

It's no longer enough for dealers and lenders to just adopt digital transformation strategies based on efficiency and compliance reasons. The right tools and resources can significantly impact the bottom line. 

In a separate Equifax study of U.S. auto lenders who process over 150,000 automated credit report inquiries for auto loan applications, data indicated a 245% increase in loan conversion rates for those lenders who automated income and employment verification. In addition, conversion rates were substantially higher for borrowers with lower credit scores. This demonstrates that using income and employment can dramatically help borrowers who typically face the most difficulty obtaining a loan.

Lenders who leveraged income and employment verification data were, in some instances, able to provide lower interest rates or better loan terms to borrowers across all credit bands when compared to lenders who did not use these resources.

The study showed that lenders saw an estimated 19.6% increase in profit from growing their loan portfolios, with only a slight rise in interest rates across consumer segments.

Why Cloud Technology Is a Significant Difference Maker

Frankly, few banking institutions or lenders have the in-house resources required to integrate automation tools to extract valuable and relevant insights from their data once compiled. However, trusted resources can provide financial institutions of all sizes access to flexible data integration and data access capabilities. Offering multiple delivery options can help lenders quickly adopt an enterprise-wide, standardized loan decision framework based on integrated income and employment data from a single verification source.

Many financial institutions have mounds of data in their arsenal. When deciphering data points for advanced risk models, lenders frequently are left asking many questions: How can I bring internal data together with up-to-date information from third-party data providers to create a comprehensive view of the loan applicant? And once that data is compiled, how do I best use this data to uncover insights for loan affordability? How can I act to make sound decisions and reduce risk? How can I use this data to convert more loans?

Cloud technology can enable the purchasing experience consumers have come to expect by providing lenders with a quick but comprehensive view of borrower affordability. This is done by removing data silos or the technical barriers between data sets and eliminating the cumbersome process of lenders pulling data from multiple sources to get a complete picture of a borrower.

By bringing these data sources into a cloud-based environment, data can become a seamless, globally distributed data fabric, enabling lenders to combine data in new ways, unlock novel insights and ultimately foster a better experience for borrowers.

Identifying and Unlocking New Customers

By incorporating automated income and employment data, auto lenders have the ability to unlock new consumer markets that would be overlooked otherwise. According to Equifax, nearly 20% of all consumers with a subprime credit score today are considered financially durable; in fact, among consumers with a modest 580 credit score, 10% have estimated total household income over $178,000 —pointing to an untapped market of potentially attractive customers. Yet according to auto trends data collected as of November 2021, only 16.6% of auto loan and lease accounts were issued to subprime consumers—the lowest October year-to-date subprime share since 2010.

Will Holleman.jpgDigital transformation strategies, combined with 'today's leading cloud-based data analytics, are helping dealers and lenders go beyond efficiency and compliance; 'they're unlocking new opportunities for business growth. While traditional credit scores remain a strong indicator of creditworthiness, 'today's consumers may be more complex. Leveraging alternative data sources in the decision-making process, such as income and employment information accessible via cloud platforms, can broaden the pool of potential consumers for lenders, leading to more conversations and potential conversions.

Will Holleman (pictured, above left) is sales director-auto verification services on the Equifax Workforce Solutions automotive team. (

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