Beyond Identity and Credit Risk: 12 Billion Unique Consumer Risk Insights
Consumer credit, whether loans, lines of credit, credit cards, mortgages, or buy-now-pay-later applications is a competitive and complex business. Well-qualified borrowers have many options available to them. They demand a fast and easy experience. Lenders need to be able to respond to these demands while protecting themselves and their shareholders from borrowers who will prove unprofitable.
There are dozens of credit risk management solutions, including custom credit risk models, used by lenders to assess the likelihood that a particular borrower will meet the terms of the repayment agreement. There are also hundreds of identity risk solution vendors focused on helping lenders determine if the applicant is in fact who they say they are. There is a significant focus on identity risk, although we find that it only represents about 20% of the misrepresentation and fraud losses for lenders.
At Point Predictive, our passion is helping lenders fund more loans by streamlining the loan origination process and improving the borrower experience. Our approach involves providing unique consumer risk insights not addressed by credit risk or identity risk solutions. Our insights into consumer income, employment, and other consumer risk characteristics reduce the need for onerous documentation and proof paperwork and expedite the lending process for the majority of applicants. When the lending process is slowed down by unnecessary steps and requests for documentation, a lender’s best prospective customers abandon the process and go elsewhere.
Lenders often require applicants to provide documentation and proof paperwork to guard against the tiny percentage of applicants who fabricate or misrepresent data about themselves on lending applications. While false information that will lead to default is only present on less than three percent of lending applications, in many cases 100% of applicants suffer the inconvenience of these requirements. At Point Predictive, we are focused on getting the consumers who supply legitimate application information the loans they need – quickly and efficiently.
Lenders must balance their ability to mitigate losses while simultaneously delivering on the primary demand of legitimate consumers – quick and easy access to loans. To do this, they need to automate as many parts of the loan decision as possible. Point Predictive enables new levels of decision automation.
The key to efficient risk management for lenders is unique insight from data and predictive scores built from that data. To effectively assess risk, a lender needs to know that all the information provided by the borrower or third party on the entire application is true and correct. Point Predictive assesses the risk of fraud and misrepresentation resulting in default at the loan application level across all risk types including identity, employment, income, collateral, and straw borrower (i.e., borrowing for someone else’s use).
Our solutions utilize a consortium of data that contains more than 115 million historical lending applications. The consortium includes a wealth of risk information not available together in any other source including known loan performance (whether there was a payment default or fraud reported) for more than 62 million U.S. consumers (approximately 1 in 4 U.S. adults and 1 in 3 U.S. adult consumers with some type of credit history) as well as risk information on thousands of third parties (such as brokers and dealerships).
Our solutions consider whether a particular consumer has been seen in the consortium before and compares the current application information (such as income, employment, residence, phone numbers, etc.) to what this consumer has previously reported as well as to historical patterns of applications that performed or resulted in default. Thousands of data elements and calculations are considered resulting in highly accurate predictive scores.
The data consortium is built upon more than eighty (80) fields of information for each application from automotive lenders and up to 120 fields of information from mortgage lenders. This enables Point Predictive solutions to make a full assessment of all the information about the application – income, employment, phone numbers, address, type of collateral or vehicle, co-borrower income and employment, etc. All of the information is used to assess whether the totality of the information on the application is reasonable and consistent.
This unique approach enables our solutions to identify trends such as copying the same employer on multiple applications, copying the same phone numbers, etc. Our solutions can also spot and alert lenders to applications containing known/common false information such as non-existent employers or known car models representing high degrees of misrepresentation or fraud losses. This enables lenders to optimize the lending process by streamlining low-risk applications and requiring further information on higher risk applications only.