Income and employment verification is one of the most important steps in the mortgage process. It helps your lender verify that you have the ability to repay your loan. When considering a mortgage lender to partner with on your mortgage journey, there are many things to consider, one being a lender with an easy, consumer-permissioned secure verification process.
In contrast, traditional methods of verification are vulnerable to security breaches, as they rely on the manual transmission of data. For example, lenders may ask applicants to email their paystubs, W2s, 1099s, and other supporting documents, increasing the risk of unauthorized access to salary information. This guide explores more secure methods of verification.
Common Risks in Income and Employment Verification
Email is a convenient communication method, but it’s not wise to email pay stubs and other sensitive documents to loan officers, as these may contain your Social Security number, physical address and other private information.
Lenders are also common targets for data breaches, as they store thousands — or even millions — of records. For example, a lender’s breach affected nearly 15 million customers, increasing the risk of financial losses. The breached records contained Social Security numbers, bank account numbers and birth dates.
Hackers can use stolen data to rack up debt in your name, ruining your credit score and making it difficult to qualify for loans and credit cards. In some cases, identity theft prevents borrowers from obtaining security clearances or landing better jobs.
Due to these risks, you should protect your personal and financial information during the income and employment verification process.
Why Data Privacy Matters in Verification
In an increasingly digital world, consumers have growing concerns about data privacy. To address these concerns, government agencies have implemented robust privacy regulations. For example, the European Union uses the General Data Protection Regulation (GDPR) to prevent misuse of consumer data.
If you’re going through employment verification in California, your lender also has to follow the California Consumer Privacy Act (CCPA), which governs how businesses collect and use data. There may be additional privacy regulations in your jurisdiction.
Some consumers prioritize privacy by refusing to submit personal documents via email or asking lenders to explain their privacy practices. You can protect your privacy even further by using a lender with a highly secure verification process in place.
How to Ensure Data Security in Your Verification Process
One of the best ways to ensure security in the verification process is to avoid emailing pay stubs and other sensitive documents to lenders and landlords. It’s also important to look for a verification option with encryption, certifications, audits, monitoring, and other measures designed to enhance security.
To ensure your privacy throughout the verification process, ask your lender about the following:
- SOC2 Type II compliance
- Application-level encryption
- Internal privacy practices
- Compliance with the CCPA, GDPR and other relevant regulations
- Staff training on privacy issues
Truv protects your data by following best practices for data security. Because it’s classified as a credit reporting agency (CRA), Truv follows the security and safety standards outlined in the Fair Credit Reporting Act (FCRA). We also engage in continuous monitoring to thwart security threats in real time.
Digital Tools for Secure Verification
Digital tools are more secure than manual verification methods, making them ideal for income and employment verification and related processes. Secure document portals and encrypted verification platforms help prevent unauthorized access to your personal data.
Services like Truv can also verify confidential income and employment data with your consent, avoiding the need for manual document handling. This limits the number of people who access your sensitive information, enhancing privacy and security.
How It Works:
Here’s an example of a consumer-permissioned verification process when applying for a mortgage.
- Your lender requests income and employment details from you
- The Truv display screen populates and you select your employer(s)/payroll provider(s)
- You login to your payroll provider(s) with your credentials to authenticate access to your records, averaging a 30-second end-to-end experience
- Truv’s API-powered software connects to the payroll provider directly, and in real time, to retrieve only the details requested by your lender for the loan approval
The Truv platform also conveniently allows you to upload income and employment documents in seconds through the same secure interface as an alternative, fallback option. This saves you time and simplifies the verification process, while ensuring your personal data is safeguarded every step of the way.
Best Practices for Income and Employment Verification
To protect your data, look for a lender that follows these best practices for income and employment verification:
- Use of secure, encrypted channels for communication and document transfers
- Regular review and updating of protocols to protect sensitive data
- Use of third-party verification services that comply with industry standards and relevant regulations
You can also prevent unauthorized access to your data by taking these steps:
- Verify that your lender follows the best practices outlined above.
- Avoid emailing confidential information to loan officers and landlords.
- Provide only the information requested without volunteering additional details.
FAQs About Secure Verification
What is the meaning of income and employment verification?
Income and employment verification occurs when a lender or a landlord verifies your employer’s name, job title, dates of employment and earnings. Income and employment verifications help determine whether you have a steady source of income.
Is it safe to email my pay stub for verification?
No, emailing sensitive documents increases the risk of unauthorized access to your personal data.
How can I ensure my income verification is secure?
You can ensure the income verification process is secure by working with a lender that uses digital tools, like Truv’s consumer-permissioned data software, instead of manual verification processes. The lender you choose should also follow best practices for preventing data breaches.
How can I avoid data breaches in employment verification?
You can avoid data breaches by choosing a qualified lender, asking detailed questions about your lender’s privacy practices and using a secure platform to transmit pay stubs, W-2s and other confidential documents. Ask your lender to provide income and employment verification process details to ease any concerns about the process.
