Personally Identifiable Information (PII)

Traditional lending institutions rely on borrowers’ historical financial data for risk scoring. 

These are the types of data provided by credit bureaus. They include credit payment history, assigned credit scores, and so on.

Due to the evolving lending landscape, particularly the emergence of online lenders, this approach no longer delivers sufficient results.

Financial institutions now face additional questions:

• How can you verify that the person whose credit history you are analyzing is truly who they claim to be?
• How can you obtain real-time data about the applicant instead of relying on outdated information?
• How can you issue a loan to a consumer with no or limited credit history?

These challenges can be addressed through alternative credit scoring using PII – Personally Identifiable Information​.

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What is Personally Identifiable Information (PII)?

PII refers to any information that can be used to identify a specific individual.

In the context of credit scoring for online lenders, relevant personally identifiable information includes:

• The potential borrower’s first and last name
• Their residential address
• Phone number
• Email address
• IP address
• Applicant’s photo

With this information, it’s possible to obtain many additional data points about a potential borrower. 

For example, at RiskSeal, through various checks, we return over 400 data points to our clients.

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How do lenders use PII?

Modern scoring systems allow for deep digital footprint analysis, which reveals the full potential of personally identifiable information.

Let’s take RiskSeal as an example to show how PII can be used to benefit lending organizations.

Borrower’s name 

Knowing the applicant’s details (first and last name), vendors like RiskSeal can compare different versions of how these names appear across various online resources — applying the name-matching technology.

If even slight discrepancies are found during this verification — or if the user uses entirely different names — they will be assigned a high-risk score.

Residential address and IP address

The address provided in the loan application can also reveal a lot about the borrower. The same applies to their IP address.

1. The lender can assess the applicant’s region of residence in terms of default probability. 

Note: even within a single country, delinquency rates may vary. For example, in the U.S., the rate ranges from 13% in Iowa to 39% in Mississippi:

2. The indicated residential address and the subscriber's IP address can be compared with the data found during credit scoring. For example, with geolocation tags in social networks or the mobile operator code.

Phone number

A phone number is not only a way to contact the borrower. It also contains a lot of information about them.

In particular, knowing the phone number allows you to:

• Find profiles associated with it in social networks and on other platforms.
• Identify the number type and detect the use of one-time numbers, burner phones, or virtual SIMs.
• Check whether the subscriber is listed in blacklists or suspicious databases.
• Compare the operator code with the subscriber’s IP address, etc.

Email address

RiskSeal also provides its clients with an extensive list of email data, including:

• Accounts registered to the address on online platforms
• Age of the email address
• Mailbox activity (email deliverability)
• Presence in blacklists
• Spam activity
• Data breach incidents
• Domain type where the email is registered, and more

Applicant's photo

Even if the loan issuance procedure in a particular credit organization does not require the borrower to provide a selfie, this type of PII is still relevant.

The RiskSeal scoring system has a Face Match technology. It compares all applicant photos found in publicly available profiles.

Image mismatch is a fact that should raise concerns for the lender. After all, such an applicant is likely hiding their true identity.

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Aspect of confidential data security

As you can see, data enrichment for credit scoring is an effective method to improve the assessment of borrowers’ creditworthiness. 

However, credit organizations must not forget about the importance of identifying and safeguarding personally identifiable information (PII). 

Each lender is responsible for the safety and legality of collecting, using, and storing their clients’ confidential data. 

To do this, they must comply with the legislation in this area. For example, if you operate in the EU, comply with the General Data Protection Regulation (GDPR).

How to ensure GDPR compliance? To do this, follow its core principles:

• Legitimate, ethical, and clear processing
• Restricted data use
• Minimal data collection
• Correctness of data
• Data retention limitation
• Data security and privacy
• Responsibility and compliance

Personally identifiable information (PII) can become an informative source of data for credit organizations. The main thing is to turn to a trusted alternative data provider and use the obtained information following the law.

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Related articles

Enhancing Scorecards With Alternative Data

Improving Solvency Assessment Using Digital Footprints

Identity Verification - Tree Advanced Borrowers' Checks

How to Ensure GDPR Compliance in Credit Scoring

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