Homeownership is one of the best ways for consumers to build wealth. Having equity increases net worth, enabling people to build long term wealth that can be passed down from generation to generation. Unfortunately, the road to home ownership is not always easily accessible to everyone.
For those who live in marginalized communities, achieving the American dream of owning a home can be much more difficult. This is why many players in the mortgage industry are actively trying to level the playing field.
Using lending technologies like The job number Equifax’s industry can help pave the way for more populations to build generational wealth through homeownership. By leveraging technologies that provide seamless access to more reliable and secure information, lenders can help ensure that the journey to homeownership is one that anyone can walk, regardless of location. be the circumstances.
Overlay additional data with traditional credit score
In the past, establishing a person’s financial well-being was often done solely with their credit rating. But in recent years, the mortgage industry has heard from borrowers that they want to be assessed using a wider range of information.
While credit reports remain a strong indicator of credit history and past financial reliability, information that is Fair Credit Reporting Act (FCRA) compliant but not included in traditional credit report data has the potential. help responsibly expand consumers’ access to credit and support a more inclusive economy.
Access to this additional data, such as the applicant’s current income and employment status, can provide better insight for a more complete financial picture of the borrower.
âIt’s really important not to look at a single point of data or try to judge a person’s financial ability to repay a loan based on very limited information,â said Ashley Wood, vice president. mortgage verification services at Equifax. âHarnessing multiple datasets, such as credit data overlaid with income and employment data, is good for borrowers and good for a lender’s business. “
Equifax is at the forefront of this movement with The Work Number, which gives accredited auditors with an authorized lens instant access to extensive employment and income data directly from over 2 million employers.
The cloud-based platform can not only transparently provide lenders with data relating to a borrower’s financial condition, but can also help open the door for more applicants to own property.
A faster path to homeownership
According to Consumer Financial Protection Bureau, 26 million Americans are referred to as “invisible credit,” which means they either have no established credit history or live with subprime credit (scores below 668), and Another 19 million are so-called âthinâ consumers, with too little data to produce a traditional credit score.
the CFPB also confirms that black and Hispanic consumers are significantly more likely to be invisible when it comes to credit, or have unrated credit records, than white or Asian consumers. About 15% of black and Hispanic consumers are currently classified as invisible credit, compared to just 9% of white consumers. Additionally, 13% of black consumers and 12% of Hispanic consumers have unremarkable records, compared to 7% of white consumers.
For these groups, given the disparities they face, the journey to homeownership can sometimes seem long. For mortgage lenders looking to streamline this route, The Work Number can help speed up the loan origination process. From providing access to instantly available information to potentially reducing closing process time, this is a valuable tool that provides lenders with the data they need to make more informed decisions.
While there is pressure for faster information, there is equal pressure to make less risky decisions on the lender’s side. This can be difficult for lenders, especially since people in need of credit may seek a loan immediately.
With secure, digital third-party data, the possibility of manual error is reduced. Operational efficiency can be increased and significant risks can be avoided. In addition to providing great customer service, The Work Number helps lenders create a faster path to income.
Serving a larger population
Lenders benefit greatly from serving a larger population of consumers. Since they must declare the populations to which they grant loans, The Work Number can help diversify their portfolio by increasing their work with this population on which they would generally be absent.
âAdding data from The Work Number to their decision-making process helps lenders see the big picture. It’s a concrete action lenders can take towards financial inclusiveness, while aligning with what consumers are looking for. Wood said. It’s a way to create inclusion in the mortgage process so that everyone can enjoy the merits of homeownership.
Revolutionizing the Rental Industry
The work number can also be a valuable tool in the rental industry. When people hope to move into rental property, they usually receive rental application approval based on their rental history and credit rating. But for those with little or no credit, it can create a huge hurdle.
Landlords and property managers using the working number may be able to verify a lease applicant’s income and work history without asking for old pay stubs or banking information, which can reduce cases of fraud. The working number can also be used by lenders for former tenants looking to go ahead and secure a mortgage.
Lenders cannot always see potential borrowers using only traditional credit data. Fortunately, many players in the mortgage industry have the acumen to take a layered approach to determining creditworthiness.
Widely recognized as the gold standard in the industry, Equifax’s working number can provide lenders with greater visibility. This access to third-party data serves to empower both the lender and the consumer and can pave the way for generational wealth for everyone.