EQUIFAX WORKS WITH CONSUMER LENDERS TO SHARE INCOME DATA
Income data sharing initiative set to play a crucial role in reducing bad debt risk
London, November 2012 – Leading consumer credit information and analytics expert, Equifax, has launched the Equifax Financial Stability Exchange to provide all sectors of the consumer credit marketplace with the ability to share declared and verified income data.
Analysis* has proved that verification of income has the potential to improve credit risk performance by up to 5 times. Equifax, therefore, believes its new data sharing initiative will play a vital role in enabling organisations extending credit terms to consumers – from credit card and motor finance providers and mortgage lenders to telecommunications, utilities and insurance companies – to reduce bad debt risk.
As Laurence Hamilton, Marketing & Performance Director, Equifax explains, this correlation should be a compelling incentive for income data sharing: “Through the Equifax Financial Stability Exchange we are facilitating the most efficient and effective sharing of income data. This will give consumer financial services and credit providers the ability to verify, instantly and reliably, information provided on an application form. Indeed, the significant improvement in performance that can potentially be achieved through the use of income data goes to the heart of reducing bad debt risk and ensuring affordability, which is such a focus for the consumer credit sector at the moment.”
Equifax is making a significant investment in the development of the Equifax Financial Stability product suite, utilising data from the Equifax Financial Stability Exchange, which will be launched November 2012. As a result, income data will be accessible as an integrated component of application and customer management processes, eliminating the need for additional income proof.
Importantly, using Equifax Financial Stability products will also help organisations comply with the ‘responsible lending’ and ‘treating customers fairly’ requirements of new OFT and FSA guidelines. These require that all organisations extending any form of credit to consumers must actively verify that the individual will be able to meet their payment commitments, both at the outset and throughout the lifetime of the agreement.
“Sharing of credit data is already a well-established practice in the consumer credit marketplace”, continued Laurence Hamilton. “We, therefore, expect the Equifax Financial Stability Exchange to play a key role in improved risk management.
“By providing trusted, transparent and reliable income verification, from application and over the lifetime of a credit agreement, we firmly believe we can drive up best practice across the industry.”
The scope of organisations invited to share income data through the Equifax Financial Stability Exchange includes mortgage providers, payday and peer-to-peer lenders, automotive finance and leasing companies, building societies, credit card and debt recovery companies. Home shopping, telecommunications, utilities and insurance companies also collect this valuable insight into financial stability.
*Equifax conducted analysis of a sample database of consumers where income data was and wasn’t available to prove the increased power of income data in assessing affordability.
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