Before the Credit Pull: How Smarter Identity Screening Saves Lenders Time, Money, and Headaches

Ever since FICO’s 40% price hike, credit reports have been more expensive than ever before. High loan origination costs led lenders to report an average net loss of $645 per loan in 2024. With these high costs in mind, ordering the wrong reports due to data entry errors or fraudulent applications can make a significant dent in your bottom line.

But what if you could identify these identification issues before spending a dime on a credit pull? With Flex ID —Certified Credit’s innovative identity screening solution—you can. This tool authenticates applicants’ identities before automatically triggering a credit order.

Below, we’ll examine the risks associated with traditional screening methods and premature credit pulls. After that, we’ll explore how Flex ID SmartSelect Shield can protect you against these risks and enhance your borrower experience.

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Risks Associated With Traditional Identity Screening and Premature Credit Pulls

With traditional screening, identity issues often only come to light after you pull an applicant’s credit report. In turn, you may invest in credit reports and trigger compliance obligations before confirming whether an applicant is who they say they are.

Even small discrepancies, from a mistyped birth date to an inconsistent address, can have big consequences. These issues can lead to failed hits or multiple credit matches, which often require manual intervention. They can also cause you to:

Waste money on credit reports for unqualified or fraudulent applicants.
Lose valuable time resolving identity issues manually.
Increase your compliance exposure by pulling credit on unverifiable individuals.
Frustrate your borrowers with stressful delays that diminish their experience.

In today’s competitive mortgage market, where loan activity is limited and credit reporting costs are sky-high, you simply can’t afford to waste time or money on unverified leads. Instead, you must quickly, reliably, and affordably validate applicants’ identities before you pull their credit.

Identity Issues: An Honest Mistake or Mortgage Fraud?

At first glance, an incorrect birth date or improper address might seem like an innocent mistake. After all, consumers fill out tons of online applications every day. It’s not hard to imagine someone typing too fast or selecting the wrong year from a dropdown menu.

However, not all mortgage application errors are benign. Fraudsters often exploit small inconsistencies during synthetic identity schemes, one of the fastest-growing threats in mortgage lending.

Unlike traditional identity theft, which takes place when a fraudster steals a real person’s identity, synthetic schemes combine real and false information to create fictitious borrower profiles. Perpetrators of this type of fraud often employ misspelled names, fabricated Social Security numbers (SSNs), or mismatched contact details.

How Common is Mortgage Fraud?

It’s easy to assume that these types of schemes are rare, but mortgage fraud is increasing in both prevalence and severity. Just take a look at these statistics:

In 2024, one in every 123 applications had signs of mortgage fraud.
In Q2 2024, year-over-year mortgage application fraud risk rose by 8.3%.
Identity fraud rose by 5.6% in 2024 and 12% in 2023.
Fraud attempts cost lenders an average of 4.5 times the original transaction value.
First-time home buyers are nearly twice as likely to engage in mortgage fraud.
Over 80% of mortgage fraud offenders have little or no prior criminal history.

Based on these trends, it’s crucial to fortify your risk mitigation efforts and verify applicants’ identities as early as possible. That’s where Flex ID can make all the difference.

Read More: Reducing Fraud and Repurchase Risk with Undisclosed Debt Monitoring

Flex ID SmartSelect Shield: Smarter Screening for Modern Lenders

At Certified Credit, we designed Flex ID to help lenders cut costs, enhance compliance, and catch fraud before spending money on credit reports. Here’s how it works:

You define the criteria that must be met for a credit pull to proceed, such as a verified SSN, matching name and address records, or a valid phone number.
Your applicants’ identities are screened using a robust verification engine that checks these details against authoritative databases.
If your criteria are met, Flex ID will order a credit report automatically.
If your criteria aren’t met, Flex ID won’t order a credit report. Instead, you’ll receive a Flex ID report free of charge.

Flex ID’s conditional ordering process puts you in control of your credit reporting costs. You get to decide which verification criteria move applicants ahead, all while minimizing your team’s manual workload, operational expenses, and compliance exposure.

6 Benefits of Flex ID for Mortgage Lenders

Flex ID S can strengthen your risk management significantly. Here are just a few of its benefits:

It prevents wasted resources – Every credit report you pull costs money. If you regularly order credit reports for unverified applicants, these costs can add up quickly. By filtering out invalid or suspicious submissions before ordering credit, Flex ID SmartSelect Shield can save you from wasting money on non-viable credit pulls. Read More: Keeping Costs Down Despite Rising Origination Costs in 2025
It streamlines your workflows – Without proactive identity screening, your team may need to chase down borrowers to correct information and rerun credit. Flex ID flags issues early on, so you can resolve them promptly and proceed without delay.
It strengthens fraud prevention – Letting fraudsters slip through the cracks can have costly consequences, from unnecessary credit reporting expenses to unexpected repurchase requests. Fortunately, Flex ID’s early screening can help you detect synthetic identities, stolen information, and other red flags right away. Read More: How to Prevent Loan Defects and Repurchase Demands With Automated VOE
It improves compliance – Flex ID satisfies Red Flag Rules, which require you to implement procedures for identifying, detecting, and responding to possible identity theft. In turn, it can help you showcase your commitment to regulatory compliance.
It enhances loan quality – By ensuring that only valid applicants enter your origination pipeline, Flex ID can elevate the quality of your lending portfolio and protect your reputation on the secondary loan market. Read More: The Secondary Mortgage Market: How Can You Ensure Your Loans Meet Investor Requirements?
It improves your borrower experience – Identity errors aren’t just problematic for your team—they can negatively impact your borrowers’ experience, too. By validating applicants’ data upfront, you can facilitate a more seamless lending process with confidence, boosting your borrower satisfaction and retention.

Flex ID In Action: Two Real-World Examples

To showcase the benefits of Flex ID, let’s consider a couple of real-world scenarios:

Example #1 – A first-time homebuyer submits their very first mortgage application. While filling it out, they accidentally switch two digits in their SSN. Their lender proceeds to pull their credit, but the results don’t match, flagging the file for manual review. In the meantime, the applicant becomes anxious about their delayed application.

By the time the SSN error is discovered and corrected, interest rates have increased and the home they wanted was sold to someone who submitted a faster offer, leaving the borrower frustrated and disappointed.

If this lender had Flex ID in place, they could have detected the typo much faster, allowing them to reach out to the borrower right away and correct the error. In turn, the applicant would have had more time to put an offer on their dream home and take advantage of more reasonable mortgage rates.

Read More: How to Get the Best Mortgage Rate
Example #2 – A fraudster uses a real SSN belonging to a minor, paired with a fake name and phone number, to apply for a mortgage. The synthetic application appears clean at first, prompting the lender to pull a credit report. After the credit pull, the lender realizes that the SSN and name don’t match official records, but they’ve already paid for the report.

If they had Flex ID, they could have run this applicant’s identity details through multiple data sources and quickly detected the mismatches. This would have prevented the fraudulent file from entering their pipeline and eliminated the cost of the superfluous credit pull.

Fortify Your Fraud Protection and Risk Management With Certified Credit

No matter the cause, identity errors can lead to bigger problems down the line, from mispriced loans to repurchase requests and reputational damage. Fortunately, Flex ID can help you screen smarter, spend less, and stay one step ahead of mortgage fraudsters.

Flex ID is just one of the many advanced tech tools we offer at Certified Credit. Some of our other products include: