Know what you’re agreeing to before connecting your bank account to apply for a loan. Connecting your bank account to apply for a loan is different from just sharing an account number where a lender can send funds. By connecting your account to a data provider, you may be sharing your account balance and transaction history with that data provider and the lender.<\/p>\n\n\n\n
Always double-check what data you’re giving permission to a company to view before logging into your bank account. Just because a company’s logo is familiar doesn’t mean you should feel comfortable connecting your account to them.<\/p>\n\n\n\n
It’s important to understand what information is being shared, with whom, and for how long before connecting your account. Keep in mind, giving a company permission to connect and view information on your bank account doesn’t necessarily mean they can also withdraw money from your account, although check to make sure there isn’t anything buried in the terms of service.<\/p>\n\n\n\n
A button that says “Connect your bank” has several possible meanings. The lender may want to confirm account ownership. The lender may need to review your income to set up repayment. Many of these things may require different information and permissions.<\/p>\n\n\n\n
| Request <\/th>\n | What it can provide <\/th>\n | What to distinguish<\/th>\n<\/tr><\/thead>\n |
|---|---|---|
| Account details or ownership verification<\/th>\n | Information such as your routing and account numbers, information about you as the account holder, or verification that you own or are authorized to access the account.<\/td>\n | Providing this type of information may help facilitate a deposit into your account but does not, on its own, authorize or agree to recurring withdrawals from your account.<\/td>\n<\/tr> |
| Access to balances or transactions<\/th>\n | Data you can give access to, who it can be shared with, and for how long. <\/td>\n | Giving data access doesn’t give permission to make payments. Transactions that can help a lender better understand your income and\/or cash flow.<\/td>\n<\/tr> |
| Payment authorization<\/th>\n | Permission to make particular types of electronic withdrawals (e.g., loan payments on a set schedule).<\/td>\n | How much (or how it’s calculated), when, and how to cancel (these details may not be grouped with other information-sharing permissions, so look for them separately).<\/td>\n<\/tr><\/tbody><\/table><\/div>\n\n\n\n <\/div>\n\n\n\n Lenders may not require debtors to authorize recurring electronic debits as a condition of receiving credit (other than certain overdraft and minimum-balance credit plans). Regulation E<\/a> requires that, prior to initiating a series of recurring electronic debits from a consumer’s account, a financial institution must obtain the consumer’s written authorization (signed or otherwise legally authenticated) for the series of transfers and must give the consumer a copy of that authorization (or other written evidence thereof).<\/p>\n\n\n\n Consent obtained electronically satisfies this requirement. Lenders are still allowed to verify applicants’ bank account and financial information even if they cannot require debtors to agree to automatic repayment as a condition of receiving credit.<\/p>\n\n\n\n The following is a hypothetical permission summary and does not necessarily reflect the permissions sought by any particular lender. Nor do we necessarily recommend the permissions in this example be sought by any particular lender.<\/p>\n\n\n\n |