Back to Blog
August 27, 2024
How Email Address Checks Impact Loan Approval Rate
Explore how email address analysis can provide alternative data for credit scoring, impacting loan approval rates.
.png)
Explore how email address analysis can provide alternative data for credit scoring, impacting loan approval rates.
Did you know that the most honest and trustworthy borrower can be denied a loan? Simply because of the lack of credit history.
There is a way for loan providers - creditworthiness assessment using alternative data. One of the sources is an e-mail address.
It’s a unique identifier that can provide a lender with a lot of information about a potential borrower.
Let’s discuss the role email insights play in credit scoring.
According to Statista, there are about 4.5 billion email users worldwide.
A lending institution can gather a lot of information about almost any potential borrower just by analyzing their email address.
According to statistics, 64.8% of the global population is of working age, which means around 5 billion people are potentially eligible to qualify for a loan.
These statistics allow us to draw certain conclusions - email is one of the reliable sources of alternative data for credit scoring.
Email lookup is a technique that allows you to find information about an applicant only by their email address.
We talked in detail about email lookup features and capabilities in one of our previous articles.
Let’s dive deeper on the information available through a potential borrower's email address.
Knowing the email address of a potential borrower, you can get access to the name, surname, and phone number.
The lender will receive information regarding any email addresses linked to the listed address.
This is important because statistics show that each user has an average of 1.86 email addresses. It is predicted that soon there will be two addresses per person.
Accordingly, a lack of linked addresses may indicate fraud.
Such data helps to eliminate fraudulent contact information and to verify that the borrower is the legitimate person.
According to CyberNews, the average person in the United States has 100 –150 accounts registered to a mailing address.
When it comes to social media, the average user has accounts on 6 or more platforms.
Modern scoring systems allow you to find social media by email. Also determine the presence of accounts on other resources.
Their absence may indicate that the email was registered recently. Perhaps for the purpose of fraudulent loan processing.
User avatars on social media linked to an email address are another informative source of alternative data.
Lenders are able to compare the images they find and determine whether they belong to one person or different people.
This is possible thanks to the advanced Face Recognition technology.
If the photos differ, it suggests that the loan application may be linked to a fictitious identity - a made-up person using a mix of real and fabricated information.
Fraudsters often resort to creating disposable email addresses to apply for loans. This allows them to hide their real data.
Therefore, it is important to determine the age of the address when deciding on a loan application.
This information allows you to determine if the email address is actually active.
If the email is not delivered, this is a red flag. The email address may not exist or may have been blocked.
Analyzing a domain provides a lot of information useful to a lender.
This includes being able to identify disposable, free domains, and suspicious top-level domains.
By checking your email address, you can determine if the address has been added to a spam list. This may indicate that:
Another source where the specified email might be found is a database of addresses linked to data breaches.
On the one hand, this is a negative fact. After all, the stolen data could be used for fraudulent purposes. For example, to create a fraudulent identity.
However, the fact of data leakage confirms the mailbox's activity.
Determining the age of an email address is important for lenders.
An older email address suggests greater reliability, making it safer to engage with the applicant. Consequently, the likelihood of default is typically lower.
You can determine the age of an email address using several methods. To learn more, be sure to check out our previous article, where we cover the topic in detail.
Here, the 5 ways to learn the age of an email.
This information can be manually found on specialized resources – for example, on who.is. To do this, enter the name of the domain on the site, and you will immediately get information about the date of its creation, renewal, expiration, and other data.
Look for accounts that are registered to an email account. Some sites, including social media, display the date the user registered.
According to statistics, the average email user encounters data breaches at least three times.
Using specialized databases, a lender can determine the fact of leaks.
This will prove that the mailbox was created a long time ago.
Compare data from different sources. For example, the date of domain registration and social network account creation.
This method allows you to collect information from public servers using search engines. Various search operators are used for this purpose.
Risk managers use email address verification for two key objectives.
The email check identifies:
1. Reliable borrowers without credit history.
2. Potential defaulters.
A high risk level may be assigned to applicants with:
Detecting freshly created mailboxes as well as blacklisted or spammed addresses can help.
Email searches provide lenders with these options:
Identity verification. An email search allows for an advanced verification of the applicant's identity.
Enhanced email account evaluation. This verification helps you determine if the address listed on the loan application is real. You can also determine if it belongs to the applicant.
Optimized networking and lead generation. Email search helps you identify the most reliable customers and partners. This is relevant if your organization is interested in expanding its target audience or partner network.
The RiskSeal Digital Scoring System checks the identity of potential borrowers using their email addresses. These checks give our clients hundreds of useful insights to help them make better decisions.
Extensive database. A key feature of RiskSeal is our extensive database, built from thousands of identity checks. If an email address has already been verified in our system, we inform the lending organization's risk manager. This helps them see if the applicant has applied for loans elsewhere.
Effortless risk management. Another benefit of our platform is that it's effortless for users. Just provide the applicant's email address, and we take care of the rest. This makes default prevention easy and effective.
RiskSeal Digital Scoring System performs the following checks on emails: deliverability verification, digital and social profiles, domain data analysis, data breaches, creation date check, free/disposable domain identification, throwaway email profiles, spam-listed addresses, suspicious top-level domain assessment, registered platforms and social media.
Email is an informative source of alternative data about a potential borrower. It is actively used in credit scoring. Email address verification allows identifying potential loan defaulters, identifying reliable borrowers without credit history, and reducing the risk of fraud.
Email can give the lender access to the personal information of a potential borrower. Also to accounts and subscriptions made to the specified email, photos of the user. Domain and mailbox data can be analyzed.
Email lookup allows you to check if an email address is active, if it belongs to the applicant, or if it is not on high-risk lists. You can also use this check to get domain information and identify disposable/temporary addresses.
There are several methods you can use to determine the age of an email account: domain registration date, date of creation of social media accounts, or data breaches.
These methods do not allow you to determine the exact date of email creation, but they help to exclude the fact of recent registration of a mailbox for the purpose of fraudulent credit processing.