Digital income verifier Truework added to its application programming interface to assist lenders in underwriting for the freelancers and contractors who make up the rapidly expanding gig economy.
The new technology, Credentials, provides a portal for consumers with 1099 incomes to confirm and validate their data. Truework integrated 150 payroll providers and gig marketplaces into the API.
The variable and sometimes volatile nature of the gig economy has often given those borrowers trouble with getting credit extended from banks and mortgage companies, said Truework CEO Ryan Sandler.
"It's always been hard for 1099 employees to get the same access to loans and other financial products as W2 employees," Sandler said in a press release. "A big reason is that accessing verified income data for 1099 employees hasn't been possible for most banks."
About 55 million people, or 34% of U.S. labor force were gig workers in 2017, according to the International Labor Organization. Projections from Statista show that total grew to 64.8 million in 2020 and will continue an upward progression to about 86.5 million and 50.9% of the workforce by 2027.
“The traditional data sources aren't really sufficient to serve the market as it sits today,” Jack LaMar, head of go-to-market strategy at Plaid, said in an interview. “Lenders try to look for predictable income to ensure a borrower can pay the payments on the loan. In a world now where somebody can turn on or turn off an additional income stream, that predictability gets pretty hard.”
Plaid — a data transfer fintech that connects bank accounts — partnered with Ocrolus — an automation platform for loan decisioning — in December 2019 to similarly tackle the issue of multi-sourced income verification.
