Verifying income can be an expensive process for finance companies; one where the cost can become even steeper if the contract holder falls into delinquency and is eventually charged-off because the individual didn’t have steady enough money to support monthly payments.

PointPredictive is looking to help finance companies avoid both of those scenarios with its latest tool as the Emerging 8 firm recently announced the general availability of IncomePASS. 

The company explained the solution can offer a real-time assessment of an applicant’s stated income to allow highly accurate clearing of validated incomes. PointPredictive believes its tool can enable finance companies using costly paycheck stub manual reviews across their portfolio to drastically reduce their expenses while improving the overall accuracy of their income validation efforts to stop defaults.

“Traditional legacy tools are expensive and provide incomplete coverage,” PointPredictive chief executive officer Tim Grace said in a news release. “Employer-based database verification checks can typically verify income on less than 30% of the applicant submissions, leaving 70% of stated incomes to be confirmed by paycheck reviews, many of which are fake paycheck submissions.

“Replacing these solutions with IncomePASS will enable 100% coverage across a lender’s portfolio and enable significantly less friction between consumers, lenders and dealers in funding loans,” Grace continued.

“We encourage lenders to do a head-to-head comparison between IncomePASS and The Work Number and measure how many inflated incomes are identified by each solution in total and how many accurate incomes are validated in total and at what cost,” he went on to say.

IncomePASS can analyze a borrower’s stated income against millions of reported incomes and salaries from seven diverse sources. Then, using the applicant’s employer, occupation, job title, residence, and estimated years of experience, a sophisticated machine-learning model can predict the borrower’s likely income.

When the borrower’s stated income is within 15% of the model’s prediction, the finance company is alerted and can allow the application to proceed to underwriting without additional manual income checks using paychecks or bank statements.

The solution also can provide a likelihood of default prediction and a misrepresentation indicator to allow finance comapnies to assess when additional characteristics of the applications are likely to lead to loss. 

Furthermore, PointPredictive highlighted its solution can allow lenders not only to reduce costs of other solutions and reduce errors associated with manually reviewing thousands of paychecks, but also can enable finance companies to book more quality paper due to the reduced friction in the process.

“Results from lenders testing our models in IncomePASS have been extremely impressive,” said Mike Kennedy, vice president and head of the analytic scientists at PointPredictive. “We have consistently seen in lender tests that 75% of applications can be cleared as valid incomes using our scoring solution with 90 to 97% accuracy rates. 

“The vast sets of data and the millions of income reports in our data sets have enabled our team to significantly change the game in terms of machine learning techniques we have applied and predictive technology that we have created,” Kennedy went on to say.

PointPredictive also mentioned results of testing at various lenders are showing that, on average, 75% of applications can be cleared as valid income reports at an accuracy rate of greater than 90%. 

Additionally, IncomePASS is alerting finance companies to income inflation and finding up to 40% of inflated incomes in less than 3% of the application population, leaving far fewer applications to review manually while simultaneously reducing the risk of inflated incomes appearing in the population being reviewed, and catching more suspected inflated incomes than existing legacy solutions.

IncomePASS is available to all financial services providers needing to verify stated income on applications. The service is available for real-time integration into loan origination and underwriting workflows.

For the next 60 days, tests comparing identification of total number of valid incomes and total number of overstated incomes with IncomePASS to the totals identified with The Work Number will be available at no charge from PointPredictive.

For more information on IncomePASS from PointPredictive, send a message to info@pointpredictive.com.