Posted by MeridianLink | March 18, 2024

The Essential Role of Third-Party Income and Employment Verification in Your Loan Origination System 

The following post is part of a series of blogs written by MeridianLink® Partners who will be attending MeridianLink LIVE! To learn more about the event, click here.

In the fast-paced world of lending and financial services, the accuracy and efficiency of income and employment verification are paramount. As financial institutions (FIs) navigate the evolving economic landscape, the incorporation of third-party income and employment verification through loan origination systems (LOS) emerges as a critical tool for making informed lending decisions. 

Accelerated Verification Process Empowers Lenders and Enhances Information Reliability 

The primary advantages of integrating third-party income and employment verification into your LOS is that lenders gain a comprehensive view of the borrower’s financial situation and instant access to this crucial information. Automated income and employment verification, for instance, enables lenders to swiftly retrieve verified consumer data directly from the source, such as payroll systems, in seconds. This rapid access to verified consumer information substantially streamlines the approval process for both account holders and prospects. As a result, financial institutions can make well-informed decisions faster, leading to expedited conversion and improved operational efficiency. 

By harnessing third-party data sources for income and employment verification, financial institutions can also improve the accuracy and reliability of the information used in the underwriting process. This approach provides definitive proof of income and employment, bolstering loan applications and reducing the risk associated with inadequate or falsified information. Additionally, the utilization of third-party verification services promotes compliance with regulatory requirements, such as the Fair Credit Reporting Act (FCRA), ensuring that financial institutions effectively manage risk while maintaining the integrity of their operations. 

Realizing the Impact of Multiple Verification Technologies That Are FCRA Complaint 

Financial institutions need to adapt to the changing dynamics of the employment landscape which includes a wide variety of work status including full-time, part-time, seasonal, contractor, temporary, gig and more. Leveraging the benefits of instant verification, alongside consumer-permissioned verification, when instant verification is not available, results in greater coverage, reduced costs, improved efficiency, and the delivery of an exceptional customer experience. 

There are additional benefits to partnering with a verification solution provider that is also a Credit Reporting Agency (CRA) offering FCRA-compliant technologies. These organizations are well versed in compliance matters and can help you more effectively mitigate risk. By leveraging authorized third-party data sources, lenders demonstrate a commitment to upholding industry regulations and standards, thereby mitigating the risk of non-compliance. This convergence of regulatory compliance and operational efficiency underscores the transformative impact of third-party verification methods on the lending landscape. 

Attributes To Consider When Choosing a Verification Solution Provider 

When choosing a third-party verification provider, you want to look for solutions with the following attributes to make sure your organization gets the most out of your verification investment. 

  • Harnesses Authentic Data: When selecting an income and employment verification provider, the authenticity of their data sources should be a top priority. Seek out providers who draw from a diverse array of reliable sources such as direct-from-employers, payroll providers, or even consumers themselves. Take a closer look at their data quality protocols to assure the information they offer is both accurate and dependable. 
  • Utilizes Diverse Technologies: Opt for providers who bring multiple verification technologies to the table, integrated into a cohesive solution. This not only eliminates the need to engage with numerous providers but also allows you to implement a waterfall process, leveraging the advantages of both instant and consumer-permissioned verification. 
  • Prioritizes Service Excellence: It is about more than just a service provider; it is about finding a trusted partner. You want a partner who is not just offering a service but is genuinely invested in the success of your organization. This mutual investment fosters a relationship built on trust and shared objectives. 

Experian is a proud Platinum Partner of MeridianLink® and together offer financial institutions a more streamlined, secure digital lending experience. Experian Verify delivers instant verifications of employment and income to credit unions, banks, and other lenders through MeridianLink® Consumer (Modern Experience) LOS. This builds upon the existing instant and consumer permissioned verification integration serving mortgage lenders through MeridianLink® Mortgage Credit Link. For more information on how Experian can help you with income and employment verification, please visit Experian Verify

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