Equifax’s Work Number research revealed not only that higher wage earners are less likely to default, but that: The risk of delinquency is reduced approximately 50 basis points for every $10,000 salary increase for individuals earning $10,000-$80,000 annually.
In fact, borrowers earning $10,000-$20,000 annually are ten times more likely to go 90+ DPD than those earning $100,000 or more.
What is most important in this finding is not that better qualified applicants earn more, but that income verification reduces the risk of delinquency. Income verification is also important in determining appropriate rates, terms and deal structures. The research found that while approximately 80% of lower income applicants inflate their reported income, roughly 75% of applicants earning $50,000 or more under-report.
Download Equifax’s white paper, Trust But Verify, to learn more about subprime vehicle loan performance when the Work Number data is used.
