topic Re: Income-How do banks know? in Credit Cards

Income-How do banks know?

sal2009 — Wed, 26 Sep 2012 15:35:19 GMT

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?

Re: Income-How do banks know?

Anonymous — Wed, 26 Sep 2012 15:36:39 GMT

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?

Re: Income-How do banks know?

jamesdwi — Wed, 26 Sep 2012 15:39:11 GMT

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.

Re: Income-How do banks know?

LS2982 — Wed, 26 Sep 2012 16:12:32 GMT

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.

Re: Income-How do banks know?

Anonymous — Wed, 26 Sep 2012 16:49:50 GMT

@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.

Re: Income-How do banks know?

Walt_K — Wed, 26 Sep 2012 17:00:54 GMT

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

Re: Income-How do banks know?

cashnocredit — Wed, 26 Sep 2012 17:04:50 GMT

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.

Re: Income-How do banks know?

Shogun — Wed, 26 Sep 2012 17:07:08 GMT

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

Re: Income-How do banks know?

CS800 — Wed, 26 Sep 2012 17:09:23 GMT

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?

Re: Income-How do banks know?

CreditScholar — Thu, 27 Sep 2012 05:03:08 GMT

@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.

Re: Income-How do banks know?

Revelate — Thu, 27 Sep 2012 06:21:12 GMT

@Shogun wrote:
Mortgage and car loans, they've always verified through my employer.

Car loans aren't that detailed in my experience; I and others have just shown up waiving our last two paystubs and haven't had a problem obtaining auto loans. They're generally the easiest to obtain out of any loan type.

Mortgages though are full monty . I'm not certain whether they're allowed to verify income with one's employer (certainly can verify if you work there or not, and probably the dates of employment) but when you're down to forking over six months of bank statements or 2 years of tax returns if self-employed, they can build up a really good picture of your spending habits.