Phone Number Lookup – Available Data for Credit Scoring

A recent report from Alloy revealed some concerning statistics. About 60% of banks, fintech companies, and credit unions in the U.S. suffered losses due to fraud in 2023.

38% of them lost between $100,000 and $500,000. However, some lost more than $1 million and even $10 million.

One of the communication channels that fraudsters actively use when committing crimes is phone communication.

With the help of disposable numbers and burner phones, attackers successfully bypass two-factor identification.

By resorting to SIM Jacking (phone number theft), they gain access to user accounts and create fraudulent identities for fraudulent loan processing.

At RiskSeal, we’ve been using phone number lookup for over two years to help our clients assess the credit risk of potential borrowers. 

This tool provides valuable insights, like the type of number, registered accounts, and its presence in databases, giving a clearer view of borrower reliability.

In this article, you'll discover how integrating phone number lookup can significantly enhance your credit risk assessment. We'll also explore the various data types that phone number lookup provides.

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The importance of phone number lookup for lenders

Phone number reverse lookup is a technology that allows you to find a wide range of information about a potential borrower using only their phone number.

An in-depth analysis of the phone number listed in a loan application provides the lender with many benefits.

• Effective risk management. The data obtained helps create a comprehensive profile of the borrower's creditworthiness, leading to informed lending decisions and a noticeable reduction in default rates.

• Fast credit decisions. Reverse phone number lookup is conducted online, allowing for near-instant assessment of applicants and boosting the number of loans approved.

• Accurate identification of potential fraudsters. Identifying suspicious phone numbers and SIM cards can raise red flags about potential fraud, helping to prevent the issuance of fraudulent loans.

• Cost savings. Early fraud detection saves on KYC procedures, as it avoids the need for these checks on clients already deemed high risk.

• Expanded target audience. By utilizing alternative data from phone number lookup, you can offer credit to borrowers who need a credit history or traditional credit score.

For more details on how phone lookup benefits lenders, read our article How to Advance Credit Scoring With Phone Number Lookup.

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Data types available with phone number lookup

The use of phone number for lookup helps the lender in assessing the creditworthiness of the applicant.

We analyze a wide range of open-source information, including messengers, social networks, and other online platforms that require phone number registration. 

Through this analysis, we can uncover valuable insights, such as:

• Invalid or disposable phone numbers
• Virtual SIMs
• Digital and social media accounts linked to phone numbers
• Burner phones usage for temporary purposes
• Connections associated with fraud rings or blacklisted entities
• Discrepancies between a phone number's country code and its corresponding IP address location

In addition to phone numbers, RiskSeal’s scoring system utilizes other data sources. You can explore these in our article RiskSeal’s Alternative Data Sources for Credit Scoring.

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Verification of phone number validity

During phone number analysis, search services identify incorrect, disposable numbers, and virtual SIM cards.

Incorrect numbers

If a phone number in an application is found to be incorrect, it could signal a simple data entry mistake. 

On the other hand, the applicant might have intentionally provided the wrong number to avoid contact in case of default.

Disposable numbers

These are publicly available phone numbers that can be used by anyone for a limited time.

IMDEA Software observations reveal that such numbers have increasingly been used by criminals in recent years. They create fake accounts and use them to access financial institution websites.

The number of such incidents reaches the millions, making the identification of disposable numbers crucial for lenders.

eSIMs

Virtual SIMs, or eSIMs, are digital SIM cards stored on a microchip in a mobile device. They replace traditional SIM cards.

This connection method is highly attractive to fraudsters because virtual SIM cards are easily swapped. This enables them to hijack a phone number from a legitimate subscriber, a type of fraud called a SIM swap scam.

In the U.S. alone, losses due to this type of fraud amount to about $70 million annually. Given the scale of the problem, lenders need to consider the use of eSIMs in credit scoring.

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Identification of linked accounts during reverse phone number lookup

To register on most modern platforms, users must provide their mobile number. This gives lenders valuable opportunities by granting access to numerous data points about a potential borrower.

According to Forbes, the average user has seven social media accounts. In some regions, this number is even higher. For example, there are over 11 registrations per phone number in India.

Consequently, a lack of registered accounts raises suspicion. The applicant might use a disposable number or burner phone to conceal their identity.

If accounts linked to the number are found, lenders gain additional insights.

Firstly, they can access information about all platforms, social networks, and messaging apps the applicant uses.

Secondly, with advanced face match technology, they can compare all found avatars. This analysis helps determine if the same person is depicted in the images. Different people in accounts supposedly belonging to the borrower could indicate fraud.

For additional information on face match techniques, refer to our article Effect of Face Match Technology on Credit Risk Management.

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Presence in specific databases

Phone number lookup helps determine whether the number is included in blacklisted databases or spam lists.

This is critical, as high spam activity often indicates criminal activity by the number’s owner.

For example, Truecaller’s report on spam and fraud reveals that almost 60 million Americans experience financial losses from fraudulent spam calls each year, with total damages reaching approximately $10 billion annually.

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Mobile registration data comparison

According to recent data, there are 8.9 billion mobile subscriptions worldwide.

This indicates that mobile network operators possess information on billions of subscribers. 

Lenders can compare the data provided by a potential borrower in their credit application with the data of the phone number’s owner.

Additionally, the credit institution can verify the consistency between the country code and the IP address, which is made possible by another type of check – IP analysis. Discover more about this in our article How Lenders Can Utilize Location Insights to Lower Default Rates.

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Phone number lookup at RiskSeal

Reverse phone number lookup is one of the checks available within the credit scoring framework on the RiskSeal platform. 

It allows retrieving information about a potential borrower from over 140 online platforms and social networks. We provide clients with hundreds of data points that help them make informed lending decisions.

How to lookup a phone number with RiskSeal

To perform a phone number lookup using our platform, follow these steps:

1. Integrate your application form with RiskSeal’s API. This way, RiskSeal receives the applicant’s details as listed in the credit application.

2. Wait 5 seconds for the completion of checks:

• digital footprint analysis
• consistency between country code and IP address
• presence of the number in specific databases
• identification of invalid, disposable numbers, and virtual SIM cards

3. Get a ready-to-use digital credit score and use it to evaluate the potential borrower.

These checks happen almost instantly, as phone number lookup is conducted in real time.

To get a complete picture of borrower creditworthiness and reliability, our scoring system also employs email lookup. This allows you to obtain information based on the email address provided by the applicant.