Better Data = Better Underwriting – Here’s Our List of the Top Data Providers.
Automated lending decisions require quality, clean data that can be instantly analyzed to make lending decisions. The U.S. lending ecosystem offers a wide array of amazing data providers and we’ve grouped the leading providers into five categories:
- Traditional Credit Bureaus
- Alternative Credit Bureaus
- Verification & Fraud Prevention
- Collateral Valuation
- Non-Traditional Data
Many of the companies list below have products that span multiple groups listed above. In those cases, we attempted to categorize them where they fit best.
Last updated November 21, 2018.
Traditional Credit Bureaus
The traditional credit bureaus strive to be “one stop shops” for the data that lenders require. They have vast amounts of proprietary data and, through a combination of product development and acquisitions, they’re constantly adding additional tools and predictive models to their product catalogs.
Their most popular product is a consumer credit report, which includes information regarding a customers’ tradelines (credit accounts), collections, bankruptcies, inquiries, and more. In addition, they provide off-the-shelf summary credit data (e.g. number of accounts, total balance), risk scores (e.g. FICO Score and Vantage Score), identity verification information, income predictions and other products.
The standard data and consumer coverage provided by each bureau is similar. However, each bureau maintains their own proprietary data which grows as lenders report information to them; since not every credit issuer reports to every bureau, they can often contain slightly different information about the same consumer. Therefore, while most lenders only work with one bureau, some choose to work with all three to get the broadest information (sometimes provided as a “tri-merge credit report”).
Traditional Credit Bureaus:
Alternative Credit Bureaus
The alternative credit bureaus are similar to the traditional credit bureaus, however they’ve carved out a niche providing best-in-class data regarding higher-risk borrowers. Lenders issuing riskier loans (for instance, those to subprime borrowers) may have more success with the alternative bureaus than the traditional bureaus, because they’ve done a great job collecting all relevant information about customers with challenged or limited credit histories.
In addition to collecting credit data, the alternative bureaus have capitalized on the opportunity to use other data when making lending decisions. They often offer data such as rent and utilities payment history, public records information, employment history and banking information, which is particularly helpful when lenders are looking to issue loans to customers with “thin” traditional credit files.
Alternative Credit Bureaus:
Verification & Fraud Prevention
A wide range of data can be used to verify application information and prevent fraud, and many terrific data providers serve this market. These companies typically fall into one of three groups:
- Identity Verification – Data sources that provide information to verify a customer’s identity, such as public record information, fraud risk scores and verification tools (e.g. knowledge-based assessment)
- Income Verification – Data sources that provide information to verify a customer’s income, such as proprietary access to company-reported income details, Form 4506-T data and income prediction models
- Bank Account Verification – Data sources that provide information to verify a customer’s bank account, such as account or routing number verification, automated check review, bank risk scores and direct access to the customer’s historical transaction data
Verification data providers:
- LexisNexis (www.lexisnexis.com): Focused on identity verification
- MicroBilt (www.microbilt.com): Focused on bank account and identity verification
- Plaid (www.plaid.com): Focused on bank account verification
- The Work Number (www.theworknumber.com): Focused on income verification
Collateral valuation providers estimate the value of common lending collateral, such as real estate or automobiles. Each provider typically has a specific niche and this market is dominated by a few big players.
Real Estate Valuation:
In addition to the data sources outlined above, lenders are often looking for other interesting ways to underwrite and reduce fraud risks. Here are a few of our favorite non-traditional data sources:
- Google Maps API (developers.google.com/maps/documentation) – Distance calculations and location mapping
- IPStack (ipstack.com) – IP geolocation information
- Mailboxlayer (mailboxlayer.com) – Email address validation
- Quandl (www.quandl.com) – Financial and economic data
We’ll keep updating this list as we work with new data providers that empower our lending clients to make better decisions. If you have any suggestions or believe we missed a great data source, please reach out to email@example.com.
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