Montrose, CA (PRWEB) September 22, 2011
Experian, Equifax and TransUnion are now providing estimates of consumer income as a credit report option, and the Merit Credit Engine (MCE) has been enhanced to support the new capability. Along with all other credit report elements, MCE parses the income estimate from the credit bureau data, and places it into a database field for use in automated lending decisions, cross-selling strategies, credit card prescreening, collections, and other applications. Income is a key factor in any credit scorecard, but up until now, lenders have been forced to rely on the consumer to self-report the information. Now it is possible to easily identify individuals that might warrant more careful income verification efforts.
New policy rules handed down by the Federal Reserve allow the use of "reasonable estimates" of consumer income when making lending decisions. In response, the credit reporting agencies have been quick to develop modeling software that takes loan types, debt-load, mortgage payments, opening dates, and the consumer's payment history into account, matching the profile with typical incomes of consumers who have similar credit report characteristics. The estimates are available as credit-report add-on products, which MCE now supports, including the Equifax "Income Predictor," Experian "Income Insight," and the TransUnion "Income Estimator."
The income estimation models are based on sound statistical principles but, at best, they can only provide a "ballpark estimate" of household income. The income values are typically described as a range of annual values, given in $5000 increments. That information is useful in screening credit card applicants and general credit-granting decisions. It is also a welcome tool for collection agencies, helping them focus efforts on consumers most likely having an ability to pay.
About Merit Credit Systems
Merit Credit Systems (http://creditengine.net) is a leading provider of enterprise-level credit report software, simplifying direct access to credit information from Equifax, Experian and TransUnion, as well as CBC and CoreLogic Credco. Merit also provides developer tools for XML credit reports and tri-merge capabilities as options for its Merit Credit Engine software.
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