Insight

How Digital Employment and Income Verifications Support Streamlined Lending Experiences

May 18, 2023

IN TODAY’S DIGITAL WORLD, we expect our interactions with businesses to be as quick and frictionless as online shopping – including everything from making a dinner reservation to applying for a home mortgage.   

Of course, the latter example is much more complex, as mortgage lenders likely must verify your employment and income information as part of your application process. That verification can help lenders better understand your ability to pay for a loan, and in turn, help you achieve some of life’s most important milestones - like moving into that new home.

What different verification methods mean to you

Your employer has a preferred way of managing requests to verify your employment or income. While some employers handle those requests directly, many rely on outside firms to provide verifications. Let’s explore three different options:

1. Automated digital verifications from The Work Number®

If you’ve ever bought or leased a house, apartment or car – without having to take extra steps to help your lender verify your income and employment – you likely benefited from instant digital verifications from a service such as The Work Number. That’s because when lenders use The Work Number, they can access an instant report with an applicant’s employment and/or income information, sourced from 2.7 million U.S. employers.

The Work Number service model starts with the consumer’s engagement, and it provides consumers, employers, and verifiers (such as lenders) a frictionless process that offers the highest-class customer experience, quality, security, and privacy. With this automated, digital service, the verification goes directly from your employer or payroll provider to the lender, which means a streamlined experience for you.

2. Verifications from other providers

Other verification providers may require you to grant a third party access to your bank or payroll account so the lender can use that information to verify income, employment and more. These third-party aggregators access your financial data directly through your account, then share that information back with the lender. Once access has been granted, the aggregator may let you know when they have accessed your data to share with the lender.

It’s important to note that granting this type of access to your data can come with its own set of risks. Recognized security best practices advise against sharing your login credentials with anyone, particularly when it comes to your bank or payroll account. And providing your login credentials to an aggregator so they can access your employer’s network in order to view your payroll data may also be against your employment agreement. Additionally, the access you grant to aggregators may not end once your loan application has been processed; you may need to go back to your bank account to unlink access. 

It’s also important to think about just how involved you want to be in the verification process. Certain providers require consumers to set up a separate account within their platform to review the data they have collected and only then provide that data to the verifier. While some consumers may prefer this model, many may find that it takes more time and creates more of a hassle than anticipated.

3. Employer- or employee-provided verifications

Some employers manage employee requests for verifications of income or employment themselves. For example, if you are applying for a loan, the lender may contact your employer and request proof of employment and/or income. This may slow down the verification process since your employer may not be able to provide the verification immediately, especially for requests received on evenings or weekends.

Sometimes you as an employee may be able to handle your own verification requests. For example, if a lender accepts a paystub, W-2 or tax return as proof of employment or income, you may have the option of pulling together this information yourself. But of course, this manual process can create a hassle for you and the lender - especially if you forget to bring those documents with you - and it can also introduce security and privacy concerns associated with providing copies of sensitive information.

The advantage of automated digital verification solutions

The Work Number, an automated, digital verification solution, enables faster lending decisions than other methods – without requiring you to hand over your private bank account credentials, create a separate account and manage the process yourself, or track down and share copies of sensitive documents. Instead, when a lender verifies your income and employment through The Work Number, it receives an instant report with the requested information. And that means less work for you.

Importantly, the use of data in The Work Number is governed by a U.S. federal law called the Fair Credit Reporting Act (FCRA). Pursuant to the FCRA, any verifier - such as a lender - must undergo a credentialing process and qualify for a legally required permissible purpose - such as reviewing your loan application - in order to access your data from The Work Number.

By streamlining decision-making processes for lenders, The Work Number can help you receive faster decisions so you can enjoy some of life’s most important events with less hassle and stress.  To learn more about other ways that verifications from The Work Number can help streamline important processes, visit our other Newsroom articles here and here.