Managing Credit

What the Experian Income Insight Score is used for



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"What the Experian Income Insight Score is used for"
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First of all, some of the readers may ask what the Experian Income Insight Score is. According to the company's website, it is a tool for: "Efficient, real-time income validation". The estimation of the lender's income, based on real, documented data, should become the primary foundation upon which future income forecast can be established and, finally, support an adequate ground for justification of a loan approval decision. 

Following the lessons of the recent credit crisis, as well credit crises further to the past, the adoption of this effective credit rating tool, which was developed by a major credit rating agency, Experian, is strongly defended by the argument that prior approvals for loans, which were based on poor and inadequate documentation, as well as dubious fast-loan-approval practices, were some of the principal causes that led to financial crises situations. Credit check and control procedures not only do they need to be tightened, but also the need is imperative for those measures and procedures to be based on accurate and regularly updated information about an individual's credit history and ability to repay a loan, in order to receive a loan.

Actually, there are two versions of the basic credit rating application: Income Insight and Income Insight W2. Both of them comply with the requirements of the related credit legislation, i.e. Credit CARD Act 2009, Fair Credit Reporting Act and Equal Credit Opportunity Act. The difference between the two versions lies in the following facts

a) Income Insight is used towards the assessment of a broader range of income sources, such as wages, investments and rent

b) Income Insight W2 is applied in order for the estimation of the credit worthiness of customers, whose income is derived exclusively from wages, to be implemented.

Who is Experian Income Insight Score useful for? Lenders, lendees or both?

Lenders have welcomed this new generation of real-time credit rating tools, the effectiveness of which is much greater than respective models used in the past. During their decision making process, prior to a credit card approval, they need to have instant and updated information on the applicant's creditworthiness, which will ensure to the highest degree possible, that the payment of credit card installments will take place within the prescribed time. Of course, they want to secure themselves against any debt recovery problems and Income Insight Score offers maximum protection, through an increased range of assessment data.

Lendees are also protected from entering into risky loan agreements. Moreover, if they were too, in the end it would be them who would have to avoid the risk of losing any property with which their loan is secured by making repayments in due time. Therefore, it is highly recommended not to take any kind of loan, in case of a documented inability to repay it and, again, Experian Income Insight Score is a valuable preventive measure. 

References:

1) Income Insight, Experian Website, http://www.experian.com/consumer-information/income-insight.html

2) Better customer insight, more debt recovery, http://www.experian.com/assets/consumer-information/case-studies/income-insight-collections-analysis.pdf

 

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