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.

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Consumer Underwriting

Underwriting Journey

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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KlearLink Match Insights

KlearLink Match Insights

• 🚨 Debt-to-Income Spike:
  • 2x increase between the second and third loans.
• 🏦 Loan Activity:
  • Four active payday loans.
  • Two loans obtained in the last 48 hours.
• ⚠️ Compliance Issues:
  • Two flagged loans as non-compliant.

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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.

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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.

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