Fintech Insights

A huge leap forward for evaluating loan risk

Colbert White | Data Solutions Group, FIS

July 20, 2020

It’s no time to keep doing what you’re doing

Many lenders today are facing a dichotomy between a cash infusion, as a result of the pandemic, and an unprecedented level of uncertainty that is making lending decisions riskier. With unemployment at historic levels and a pandemic not over, it’s critical that lenders access more than the surface-level data to make business decisions. Lenders need to dig deeper into IRS tax data with advanced tools that can help them quickly and easily make sense of it all.

Consider that in 2018, more than 14 million Americans accounted for $131 billion in back taxes owed. Some because of simple mistakes, but some for more nefarious reasons. Imagine what those statistics will look like six months from now, a year from now. How do you avoid being swept up in a lot of bad numbers?

It’s time to advance quickly with three leaps to improving loan performance:

  1. Modernize for better performance and data insights
  2. Eliminate the 20% invalid ID matches that are common in the industry
  3. Standardize assessment summaries and risk level scoring


While the pandemic accelerates modernization in areas like payments and digital banking, many lenders still rely on outdated processes and tools to conduct income verification and view IRS tax history. These dated and manual approaches are out of step with what’s currently available, and they increase your risk because they are more than just inefficient, they often lack the full picture and make it hard for you to make more informed decisions.

Take lien information as an example. This is a critical piece of data that pulls back the curtain on risk, but many FI’s no longer see that. Many are unaware that reporting agencies stopped providing lien information several years ago. That just won’t cut it in the new state of risk in lending. The health of your loan portfolio depends on that key piece of information.

The good news is that there are tools now available to you that enable you to access IRS tax records on demand, aggregate up to 20 years of IRS data in one step, automate processes with alerts, and get direct data feeds from the IRS database that include lien information. Modernization brings other benefits as well that help drive efficiency for your staff and for moving loan applications forward more quickly, which leads to number two and three…

Eliminate invalid ID matches

Twenty percent of all IRS tax requests are rejected and returned due to invalid IDs. Most are simple mistakes, but the errors costs time and money. This unfortunate reality increases work for your staff, slows the process of moving the loan forward and gets in the way of a good experience for a valued customer.

When you modernize your approach with solutions like Ethos Tax Intelligence, you can immediately see and correct ID verification mistakes in real-time and recover instantly. This is not rocket science, however considering that so many institutions are still operating with more manual processes and tools, it is a giant step forward for the loan approval process and the ability to access IRS tax records for income verification, history and lien information.

Standardize assessment

Far too many lenders rely on staff to comb through tax documents which can get complicated very quickly. Leaving aside the time it takes to assemble and review all these arcane forms, how does your staff discern the information needed from these complex records? Have they been trained properly and is there consistency across your decision process for each loan applicant? These questions and challenges face every lender that isn’t utilizing both advanced technology tools and IRS expertise.

Take a giant leap to reduce lending risk now

It’s time to improve your lending processes and ensure you get all the data you need to make the best possible decisions even in the difficult days ahead. FIS can help you make this seamless shift into the future without a lot of time or setup. The benefits and ROI are compelling and meaningful. In fact, the leap may even cost you less than what you’re doing now.