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IP Address
Examine how IP address analysis helps credit organizations verify applicant locations, assess regional default risks, and detect potential fraud.
Examine how IP address analysis helps credit organizations verify applicant locations, assess regional default risks, and detect potential fraud.
What is an IP address? It is a specific numeric identifier of a device in a local or global computer network using Internet Protocol.
The abbreviation IP (Internet Protocol) itself is used to refer to a system of rules that govern the method and format of data sent through a network.
The authenticity of this identifier is the key to the correct operation of the internet. This is due to the many IP addresses available for different generations.
For example, there are 4.3 billion addresses in the fourth version, IPv4. While the IP addresses of the last, sixth generation, even more – 2^128, that is, trillions of trillions.
An IP address serves two purposes:
1. Identification of the device on the network. This is possible with the data it contains about the location of the device.
2. The ability to communicate with the device. The unique identifier allows the router to send data exactly where it’s needed.
There are several types of IP addresses, each categorized by specific characteristics, such as version, purpose, and scope of application.
IP addresses are composed of several types of data, which include:
The location of the device. This includes the country, region, or city where it is located. You can also set the desired coordinates of the machine.
Network data. By knowing the IP address, you can get information about which network the device belongs to. Among other things, information about the Internet Service Provider (ISP) becomes available.
Connection type. You can identify whether your client is using a residential, commercial, or mobile connection.
This information is actively used by credit organizations as part of the identity verification of potential borrowers.
Lenders use IP address lookup technology to collect information about a borrower based on the IP address of their device.
Here are its main features:
1. Matching the data from the loan application with the established location of the device. Based on the discrepancies detected, the lender may assume that the data was deliberately withheld.
Such an applicant will be assigned a high-risk level due to suspected fraud.
2. Assessment of default risk depending on the borrower's region. Numerous studies have found that loan delinquency rates can vary even within the same country.
For example, Mexico has the highest default rate in the country's southeast. In some cities, it is as high as 76 percent. In other areas, this indicator does not exceed 13%.
The situation is similar in the USA. Here, depending on the state, the number of overdue loans varies from 13% to 39%.
3. Analysis of the applicant's location. IP analysis allows the lender to establish the exact coordinates of the borrower at the time of applying for a loan.
A positive sign will be an application to the credit organization from a flat or office building. Sending an application from a place of imprisonment is a reason to refuse to issue funds.
4. Checking the connection via VPN and other anonymizes. This fact can prevent lenders from performing location analysis and obtaining data for an objective assessment of applicants.
Initially, VPN, proxy server, iCloud Private Relay, and other similar services were created to ensure the privacy of users on the Web.
However, recently, they have been increasingly used by criminals. Profile studies confirm that the vast majority of online fraud cases are related to the use of anonymizers.
Therefore, the fact that an applicant is connected through one of them may be taken into account by the lender as a sign of high risk.
With such a wide range of IP address lookup capabilities, the lender gains a number of advantages:
An IP address is an informative source of data for modern credit organizations.
With its help, the lender can establish the exact location of the borrower and obtain other information important for its objective assessment.
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