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Income-How do banks know?

Established Member

Income-How do banks know?

I'm curious how banks know/confirm your income....I moved last year and the leasing company said they were able to confirm my stated income....anyone know?  do they look at payroll records?

Message 1 of 11
10 REPLIES
Moderator Emeritus

Re: Income-How do banks know?

Did you put down the name and phone number of your employer? Perhaps they contacted them to confirm that your salary fell within a certain range?


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Message 2 of 11
Valued Contributor

Re: Income-How do banks know?

For loans, many banks/creditors will call and confirm income. Most credit card companies don't, if you raise enough red flags with them they may request paycheck stubs, bank records and/or tax returns.

 

If they pull your credit report, they can usually see what your payments history was for the last month or more depending on report. But your income isn't stated on your credit report. Your report may also have your empoloyer listed. 

 

 

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Message 3 of 11
Mega Contributor

Re: Income-How do banks know?

All bureau reports have employment info listed if you provided it to them.

It's best to make sure it is accurate, makes a loan app run smoother.



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Message 4 of 11
Moderator Emeritus

Re: Income-How do banks know?


LS2982 wrote:
All bureau reports have employment info listed if you provided it to them.

It's best to make sure it is accurate, makes a loan app run smoother.

 

Yes, but just to be clear... they include the employer's name and possibly the position held, but not the salary.

 


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Message 5 of 11
Senior Contributor

Re: Income-How do banks know?

There's also a third party reporting agency that provides information about what you make. I can't remember what they are called off the top of my head now, but there were posts about them here a year or so ago.  I think at the time they said that they had about 1/3 of the population in their systems.  IIRC, they voluntarily agreed to supply people with one free report a year similar to what is required of the CRAs, so you can find out if you are in their system and what they say about you.  No idea how they are getting their income information.

 

ETA:

Check out "Work Number" in this link.  Can't remember if that is the same thing I was thinking of, or if it is another specialty report.  It says they only have data on 25 million people, so I may have pulled the 1/3 number completely out of thin air.

 

https://www.privacyrights.org/fs/fs6b-SpecReports.htm#2


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Message 6 of 11
Valued Contributor

Re: Income-How do banks know?

CCs use statistical measures from your credit report. This is based on your monthly balance variations and loan types. FICO sells these algorithms and banks can combine them with their own metrics from internal banking records along with you stated income.

 

Mortgages are done more carefully because they are longer term and more money is at stake.


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Message 7 of 11
Moderator Emeritus

Re: Income-How do banks know?

Mortgage and car loans, they've always verified through my employer.

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Message 8 of 11
Super Contributor

Re: Income-How do banks know?

Don't we generally by default when we accept the terms and condition (that most of us don't read) agree that they can do some verifications if they feel like it?




Message 9 of 11
Valued Contributor

Re: Income-How do banks know?


cashnocredit wrote:

CCs use statistical measures from your credit report. This is based on your monthly balance variations and loan types. FICO sells these algorithms and banks can combine them with their own metrics from internal banking records along with you stated income.

 

Mortgages are done more carefully because they are longer term and more money is at stake.


+1. By looking at your previous usage patterns, they can get a rough idea of what your income might be. They probably give a certain amount of leeway for variation compared to what you report, but if the difference is too high then it raises red flags. At that point you might be asked for verification via paystubs, FR, etc.

 

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