These days, when so many things are readily available online, money lenders have not failed to leverage the power of the internet. Today, by applying for a loan, such as a payday loan, remotely, a user skips the hassle of personal visits and time-wasting in long lines typical for bank offices and has an opportunity to secure additional finance from the comfort of their home. Payday lenders, on the other hand, expand their customer base by making their services more accessible. However, financial services, including money lending, require identity checks. So how is a lender to verify your identity remotely?
They will start by checking if you exist. This may be done by reaching out to a credit bureau (for instance, Equifax) that will attempt to establish an identity match by consulting its vast customer database. Understandably, a match implies that the applicant has credit history records. Therefore, no matches will be returned for individuals with no previous experience of dealing with financial services, such as recent immigrants or young citizens. In this case, a lender may resort to consulting such alternatives as rental payment information to verify your identity. Such public records, ranging from property deeds to utility and phone bills, may be accessed through third parties like RSA. In addition to these basic identity matches, a lender will have a few other mandatory checks to perform. These will ensure their applicant is neither found in the watch list of The Office of Foreign Assets Control, nor using an IP address located in a sanctioned country.
Secondly, there are the so-called “out-of-wallet”, or “knowledge-based authorization” questions. You may be familiar with standard security questions in online banking – the ones you have to select to make your account better protected against unauthorized use. Similarly, in the case of online payday loans, “out-of-wallet” questions are meant to prevent a thief from securing a loan using a stolen wallet and whatever information it may possibly contain. In this respect, the precaution is similar to a credit card PIN or a signature match. Naturally, generation of such questions, given zero previous knowledge of the applicant, is performed through third-party services. These include the above-mentioned credit bureaus and alternative providers of data.
If all else fails, and none of the methods return any definite matches, manual review procedures may serve as the last resort. It is up to the lender to decide whether to conduct a manual check for a suspicious applicant, or to reject them immediately. As part of a manual review, you may be asked to do the following:
- fax, email, or upload a copy of your photo ID
- answer a few additional questions by phone, or
- come to the company’s office for an in-person interview.
Understanding of the nature of different identity checks allows an applicant to determine possible objective reasons behind their rejection if such decision is made. If this happens, they might take steps to increase their chances of securing a loan the future – for example, by developing and improving their credit history. Remember that a lender’s decision may be reconsidered when you re-apply with such additional data available. Third-party checks are there to prevent crime, rather than thwart lending to honest citizens.