Data has become the currency of the world, which makes the handling of data just as important as it is with any other currency. Data must be kept secure against loss and theft, yet it must also be accounted for and accessible when needed.
The importance of data handling is accentuated in the employment and income verification field, which revolves almost exclusively around employee information. This two-part series will explore the importance of data handling as it pertains to the verification field, first focusing on security and accuracy. The follow-up will look at accessibility.
Data Security in Employment and Income Verification
Keeping data safe from malicious attacks and careless breaches is something that concerns employees, employers, and lenders.
Employees’ Concerns for Data Security
Data security is crucial for employees because they are most directly impacted by breaches. Compromised data creates vulnerabilities, even if it’s never maliciously used, and malicious use can have drastic consequences on everything from auto insurance rates to home mortgages. Clearing up malicious activity can take hours and months, both consuming employees’ time and possibly delaying home shopping or other major activities. The time required to check and monitor activity can be substantial, even if the compromised data is never used.
Employers’ Concerns for Data Security
Employers should recognize how data security affects their employees — it should be their second-greatest concern after physical safety. Investing in data security is simply doing right by employees, and it’s also essential to mitigating potential liability. Employers are often the ones that must provide credit monitoring in the wake of a breach, after all.
Lenders’ Concerns for Data Security
For lenders, keeping data secure is also the way to do right by applicants and mitigate liability. An upfront investment in security also saves time, as you won’t have to deal with the damage caused by a breach.
Keeping Data Secure in the Verification Field
The responsibilities for employment and income verification services to keep data secure is twofold. First, data must be stored securely — extensive measures to protect data should be in place. Second, employees, employers, and lenders all need a safe and user-friendly way to access the information they want. Access through stolen usernames and passwords must be prevented.
These basic tenants of data security aren’t perks of good service but rather the basic requirements of any service provider in the field.
Data Accuracy in Employment and Income Verification
Maintaining accurate data is of equal interest to everyone involved, especially employees and lenders.
Employees’ Concerns for Data Accuracy
Employees need accurate data so that they can qualify for home mortgages and other loans without issue. Correcting inaccurate data causes delays, and any delay can have significant consequences when going through a major process such as purchasing a home. Long delays can lead to temporarily uncertain living situations, rate lock expirations, and occasionally, mortgage approval expirations.
Employers’ Concerns for Data Accuracy
Although employers may be less directly impacted by inaccurate income and employment history data, there are indirect impacts that could result, such as upset employees, time spent on reworks of the initial data provided, and an overall reputation of providing wrong information to the verifier community.
Lenders’ Concerns for Data Accuracy
Lenders rely on accurate data to underwrite home mortgages and other loans. Inaccuracies in the underlying details can affect risk assessment and throw off the entire underwriting process. Not to mention, lenders must also spend time correcting errors.
Ensuring Accuracy for Verification
Maintaining accurate information should be of the utmost importance when it comes to a verification provider. It is the responsibility of the verification service to provide accurate information to comply with the FCRA requirements. Quality and integrity checks should be performed on a regular and frequent basis, and any errors that are discovered should be corrected promptly. In other words, the data should be scrubbed almost continually.
Maintaining accurate records is often difficult for the largest verification services. Large services have too many records to perform quality checks on and scrub regularly, and they frequently take a long time to resolve errors. Simply being on hold can take hours, and that’s before a representative is able to address an issue.
Higher quality income and employment verification services can better ensure that their data is accurate. The services have manageable records that can be regularly quality-checked and scrubbed. Because these services specialize in verification, they are also better able to quickly resolve any error. At Experian, we have average call wait times under 30 seconds and are able to resolve most issues within 30 minutes.
Comprehensive Data in Employment and Income Verification
Data security and accuracy receive the most attention, but maintaining comprehensive data is also essential.
Employees’ Concerns for Comprehensive Data
Employees need comprehensive employment and income verification to utilize their full borrowing capacity. Missing employment records can lead to questions about work and underwriting problems, and records that don’t reflect all of an employee’s income lead to lower loan approval amounts. Depending on an employee’s financial position, the reduction in borrowing capability can be considerable.
Employers’ Concerns for Comprehensive Data
Employers can’t do anything about income recording outside of an employee’s salary and other pay that they receive from a company. They can make sure that all of their data is accurately recorded to ensure that employees won’t face this issue.
Lenders’ Concerns for Comprehensive Data
As is true with accuracy, lenders also rely on comprehensive data during underwriting. All available income sources need to be accounted for; otherwise, a lender might approve a lower loan amount than should be approved. If another lender has additional details that allow for a larger loan approval, employees will likely borrow from them.
Ensuring Comprehensive Data for Verification
Comprehensive data requires looking at all available income sources, which can include many sources beyond a salary and bonus. In particular, income generated from stock pay, bond pay, short-term rental revenue, royalties, and other less common sources of income all need to be recorded so that they can be taken into account.
Secure, Accurate, and Comprehensive Data
We at Experian always take data security, accuracy, and comprehensiveness seriously. Whether an employee, employer, or lender, we offer reliable income and employment information.