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Instant Bank Verification for Improved Credit Decisioning

Jul 19, 2017 MicroBilt News

Instant Bank Verification for Improved Credit Decisioning

Lenders need the ability to instantly verify bank statements, account details, employment history, and balances. When determining a borrower’s ability to repay a loan, it's absolutely crucial that lenders have the tools they need to find out this information fast and efficiently. Without access to this vital data, it can lead to poor judgment calls when approving loans.

According to the U.S. Federal Reserves, during the second quarter of 2020, 1.98 percent of all consumer loans were delinquent. The 2020 delinquency rate was one of the lowest for the last 30 years. During the COVID-19 pandemic, with millions of Americans out of work those numbers look to increase substantially once the dust settles and agencies begin reporting delinquencies once again.

More recent reports indicate that despite leveling off in June and July of 2020, a fresh rise in new credit delinquencies occurred once the federal unemployment benefits of $600 expired. While the serious delinquencies brought on by economic hardships related to COVID-19 were just beginning to decrease, a fresh wave of new delinquencies is taking its place.

With this new information and the potential for rising delinquency rates, lenders must find new ways to mitigate their exposure to risk from borrowers to find new growth channels. Fortunately, Instant Bank Verification allows lenders to see recent trends in bank deposits, bill payments, and more to help businesses make informed lending and crediting decisions.

Why you should use Instant Bank Verification

MicroBilt's Instant Bank Verification (IBV) provides lenders with real-time transactional data and access bank account data using financial REST APIs from more than 20,000 financial institutions worldwide. This banking information allows them to identify the extensive credit history of a potential borrower, customer, partner, or themselves. With this information in hand, the end-user can make more informed decisions about the potential for loan defaults, insufficient funds fees, and more.

Although a review of a person's credit history provides useful data about their payment habits, it doesn't always provide a thorough picture. IBV supplements the credit history with an alternative credit check that fleshes out any gaps and gives lenders a more thorough and robust understanding of an applicant’s financial, employment, and credit situation.

With the current state of things and so many decisions up in the air for 2020 and beyond, it is more important than ever to have as much accurate, up-to-date information available as possible. That is only part of what makes Instant Bank Verification a good fit for businesses, however. The other side of the equation is speed.

In addition, speed is often of the essence to "win the loan." Lenders that exhaust too much time and effort attempting to double-check and verify borrowers' credit history will see these loan applicants move on to a different, faster lender. IBV gives lenders this information immediately, without all the hassles of using paper. This speed helps lenders maintain a competitive edge. With IBV, you get the benefit of speed without sacrificing the quality of information you have access to.

Who needs IBV?

IBV reduces the time spent on loan decisioning and maintains compliance with the Fair Credit Reporting Act (FCRA). IBV works for anyone who needs to make a credit or borrowing decision.

It's crucial you have the ability to accurately and quickly verify a potential borrower's banking and payment history as well as his or her identity. This is especially the case as COVID-19 continues and crimes such as identity theft and fraud are on the rise. Verifying the identity of prospective borrowers is an important tool for helping your organization avoid the financial fallout associated with these terrible crimes. IBV allows you to protect your business interests and the financial interests of consumers.

IBV for Consumers

If you're an individual who needs to catalog your bank statements and proof of job history to obtain a loan, this can be a time- and resource-consuming endeavor.

Consumers have access to the same IBV features listed out above. This helps speed up the decision-making process during loan underwriting. Having this information instantly helps when consumers need money quickly, whether to cover bills or make an important payment. 

IBV is easy for consumers to use and offers a speedy solution for gathering the documentation lenders often require. It does this by accomplishing, in seconds, the information that might take you endless frustrating hours to retrieve on your own.

IBV for Businesses

Businesses who utilize equipment and other leasing options or are involved in underwriting business loans need to ensure they're working with borrowers who can repay their balances. If you're a business that needs to make a bank call or obtain statements for a particular customer, IBV verifies:

  • A borrower’s ability to repay a loan.
  • Income.
  • Current and available account balances.
  • Other financial obligations and loans.

This is information goes well beyond what you have access to with traditional credit reports from the major reporting agencies. That means businesses have more tools at their disposal to use when making vital lending, leasing, and crediting decisions. Regardless of industry, businesses of all shapes and sizes can benefit from the use of Instant Bank Verification as a tool for making lending decisions that minimize the risks of defaults and delinquencies, even in trying times.

Lenders using MicroBilt's Instant Bank Verification gain immediate insight into the banking information necessary to make more accurate decisions in the lending process. This visibility into payment history and account data reduces the risks associated with borrowers defaulting and helps create more revenue potential. 

The year 2020 has been fraught with change for much of the world. The COVID-19 pandemic has shaken the U.S. economy in ways we’re only just now beginning to understand. Unfortunately, while the year is almost over, the pandemic is showing no signs of slowing. This means businesses must be extra vigilant in your efforts to identify risks while continuing to extend credit to those who are currently driving the economy.

It can be a slippery slope for many businesses. A slope that MicroBilt’s Instant Bank Verification can help your organization climb to the top. Contact us today to learn more about IBV and various other solutions we offer that can help your business not just survive, but thrive, in these trying times.