Chapter 21: Commercial Services
IN THIS LESSON
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Automation is the process of a financial institution using score bands based on credit scores, credit attributes, and other financial attributes determined by the financial institution to automatically assign an approve/decline/review status to a commercial application.
For the mid-tier clients that we serve, you will find that automation is not a priority, nor is it very common. We have started to see an uptick in interest for automation among small businesses (as defined by Reg 1071) as Reg 1071 is causing our customers to start to think about small businesses more like consumers. Reg 1071 requires that financial institutions start collecting certain minority group information on small businesses, causing our customers to see the need for automation in the future to avoid discrimination. We can use BusinessConnect for credit to help them decision their applications and incorporate our business reports and scores into their decisioning process.
The hesitation of our customers moving to automation is mainly caused by the belief that there is a lack of market acceptance and the high price of commercial reports.
To overcome these resistance factors, we must present the robust database numbers for Equifax’s commercial data and work creatively on pricing.
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Tax Transcripts (Form 4506-C) can be used by lenders as a tool to verify the income of loan applicants. Lenders use these transcripts to confirm that the income reported by the applicant on their loan application matches the income reported to the IRS. This helps lenders to ensure that the borrower has the ability to repay the loan. Additionally, tax transcripts can provide lenders with a more complete financial picture of the borrower, which can be helpful in making a lending decision. It is important to note that tax transcripts are just one of many factors considered by lenders when evaluating a loan application.