The mortgage industry is tasked with assisting individuals obtain financing for their dream home. In order to accomplish that job, bankers need to document to underwriters that the individual’s credit history warrants and income justifies extending them a home mortgage.
The problem faced by mortgage professionals is that millions of Americans lack sufficient credit data in their files to generate a credit score. Credit bureaus estimate that between 35 and 54 million Americans are unable to access credit due to little or no previous credit history.
The lending industry needs alternative solutions in order to qualify individuals. Scoring tax returns has the advantage by using readily available information that is already familiar to lenders
One huge benefit of scoring tax returns over credit scores is disclosing tax delinquencies. If a lender is unaware of a tax lien and the IRS cleans the borrower’s bank account, the lender may immediately have a distressed loan n their portfolio. Tax scoring is a great way of identifying risk before funding has every occurred.