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Debt-To-Income Accuracy

The Problem​

Limited Visibility

Current aggregation data provides only a partial view of customers' debt obligations over the last 60 days, leading to inaccurate assessments of debt-to-income (DTI) ratios.

Consumer Underwriting​

Key Events​

1️⃣ First Loan

  • Date: July
  • Provider: XYZ Cash Ltd.
  • KlearLink Data Match: Confirms one other payday loan.

2️⃣ Second Loan

  • Status: Late on two cycles with XYZ.

3️⃣ Third Loan Application

  • Date: Late August
  • Action: XYZ pulls match data from KlearLink.

4️⃣ KlearLink Insights on Third Loan

  • 📈 Debt-to-Income Ratio: 2x increase.
  • 🏦 Active Loans: Four other payday loans.
  • ⏱️ Recent Loans: Two obtained within the last 48 hours.
  • ❌ Non-Compliant Loans: Two loans flagged as non-compliant.

5️⃣ Bankruptcy Declared

  • Timeline: 14 days after the third loan application.

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Solution​

Leveraging KlearLink for Accurate DTI

💡 XYZ Cash Ltd uses KlearLink to:

  • Match applicants to their full debt obligations.
  • Accurately calculate their true DTI ratio.
  • Detect non-compliant and high-risk loans.

The Outcome​

A Proactive Decision

✔️ XYZ Cash Ltd declines the third loan application due to:

  • 🚫 Recent DTI spike.
  • 🚨 Non-compliance flags.

Result:​

  • 💸 Eliminated charge-off risk.
  • ✅ Maintained financial compliance.
  • 📈 Ensured long-term sustainability.

Bank Accounts

The Problem​

The Challenge

Customers are regularly managing multiple financial obligations across numerous bank accounts simultaneously.
📉 Lenders lack visibility and tools to identify these situations, resulting in missed opportunities for better decision-making.

Consumer Underwriting​

Key Events​

1️⃣ First Interaction

  • Customer applies digitally for their first payday loan with Quick Cash Fast Inc.

2️⃣ Bank Account Linked

  • The customer links their primary account with Scotiabank successfully.

3️⃣ Data Match Obtained

  • Application data matched via KlearLink, revealing:
    • 2 active payday loans.
    • 2 additional institutions linked within the last 60 days. ​

4️⃣ Action Taken

  • Quick Cash leverages KlearLink data to prompt users to link two additional accounts.

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Solution​

A Smarter Approach

💡 Quick Cash Fast Inc. utilizes KlearLink's match service to identify:

  • Bank accounts used for other loans.
  • Uncover key financial behaviors to enhance decision-making.

The Outcome​

Outcomes Achieved

✔️ Quick Cash Fast Inc. now benefits from:

  1. Enhanced Data: More transactional data for making smarter decisions.
  2. Improved Compliance: Better management of financial obligations.
  3. Increased Customer Lifetime Value (CLTV): Improved insights to retain and grow customers.

Positive Payment Compliance

The Problem​

The Challenge

Lenders lack tools to assess positive or negative payment compliance:
1️⃣ At the time of the first credit decision.
2️⃣ As borrowing cycles progress.
This gap limits lenders' ability to evaluate customers' current financial behavior accurately.

Consumer Underwriting​

Key Events​

1️⃣ Loan Application

  • First-Time Borrower: Applies online for a payday loan.
  • Credit Score: Poor at 430.
  • Details: Delinquencies on credit types from 12–24 months ago.
  • No new credit reported to the bureau since defaults.

2️⃣ KlearLink Match Found

  • Active Loans: Two payday loans matched.

  • 📅 Loan History:

  • Loan #1: Active for 6 months, 100% positive payment compliance.

  • Loan #2: Active for 3 months, 100% positive payment compliance.

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Solution​

Clear Visibility with KlearLink

💡 Lenders leverage KlearLink to:

  • Identify borrowers' current loan compliance status.
  • Differentiate between historical credit issues and recent positive payment trends.
  • Gain confidence in assessing borrowers’ credit stack performance.

The Outcome​

Informed Credit Decisions

✔️ The lender gains critical insights:

  • Position in Credit Stack: Becomes payday loan #3 for the borrower.
  • 💪 Positive Performance: Customer demonstrates strong compliance on existing payday loans, despite poor credit history.

Result:​

  • 📈 Confident Approval: The lender extends credit based on the borrower’s recent payment behavior.
  • 🔍 Accurate Risk Assessment: Focus shifts from outdated credit history to current compliance trends.

Matched Monitoring

The Problem​

The Challenge

Lenders lack clear, ongoing indicators of:
1️⃣ Whether borrowers are obtaining new credit post-origination.
2️⃣ How borrowers are performing on their new credit obligations.

Consumer Underwriting​

Key Events​

1️⃣ First Loan Application

  • Provider: Speedy Dough Inc.
  • Status: Approved and funded.

2️⃣ Ongoing Monitoring Initiated

  • Speedy Dough opts for KlearLink monitoring for new customers.

3️⃣ New Credit Obtained

  • Timeline: One week post-origination.
  • Provider: EZ-Monee.

4️⃣ Compliance Update

  • Speedy Dough Loan: Borrower remains compliant.
  • EZ-Monee Loan: Borrower flagged as non-compliant.

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Solution​

Continuous Loan Performance Monitoring

💡 Speedy Dough Inc uses Clearwatch to:

  • Monitor borrowers’ loan performance over time.
  • Stay updated on borrowers’ new credit obligations and compliance status.

The Outcome​

Proactive Decision-Making

✔️ Speedy Dough Inc can:

  1. Ingest Monitoring Data:
    • Borrower payment performance from other lenders.
  2. Make Data-Driven Decisions:
    • Determine whether to extend credit for the next payday cycle.

Result:​

  • 📈 Improved loan portfolio performance.
  • 🔍 Enhanced risk management.
  • ✅ Increased operational efficiency.