Equifax Study Suggests Providing Credit to New Immigrants Could be a Wise Investment
TORONTO, ONTARIO--(Marketwired - April 29, 2015) - Equifax Canada's New Immigrants Study suggests that newcomers to Canada have low credit delinquency rates and could be considered a wise investment for financial institutions.
With approximately 250,000 new immigrants arriving in Canada every year, there is a big opportunity for financial institutions to connect with this growing customer base and establish long-term relationships. However, it can be hard to assess this population's risk due to their lack of Canadian credit history.
"There is a common misconception that providing credit to new immigrants is a risky move for financial institutions, but the fact is that immigrants have a 20% lower delinquency than the national average of the general population," explains Regina Malina, Senior Director of Decision Insights at Equifax Canada.
Financial institutions often approach new Canadians cautiously, presenting these customers with limited product selection for credit due to a lack of insight into their credit history and risk score.
The New Immigrants Study found that these limited credit options tend to push customers to seek credit with another institution because the initial options available to them may not meet their changing needs over time. Many new Canadians end up closing their first Canadian credit cards or let them become inactive, and financial institutions are losing these customers to their competition often within the first two years. About half (46%) of new immigrants with an inactive or closed credit card still need this product, and 71% of them will find a new financial institution that offers them a higher limit.
Between 2006 and 2011 approximately 1.2 million people immigrated to Canada, and one of the first things these newcomers do is apply for financial services. When they establish credit, they integrate into the Equifax payment system and start to build a Canadian credit history.
Malina explains that financial institutions should continue to use more robust means to assess the risk of these new Canadians and tailor products in a way that allows immigrants and those with limited credit history to transition to products that meet their changing needs. "By providing deeper insights on immigrants and other Canadians with limited credit histories through products like Score Complete, for example, Equifax can help financial institutions understand this underserviced portion of the Canadian population." This is critical, she says, to "limit your risk and build solid relationships with these new Canadians."
Learn more about assessing the credit risk of new immigrants and tailoring products to meet their needs by downloading a whitepaper from Equifax.
 The study is based on a sample of approximately 114,000 new immigrants identified within the Equifax database, who may have immigrated to Canada between 2010 and 2011. Their credit behaviour was observed over a 36-month time window.
Equifax is a global leader in consumer, commercial and workforce information solutions that provides businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide. The company's significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enables it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 19 countries and is a member of Standard & Poor's (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2014, Equifax was nominated as a Bloomberg BusinessWeek Top 50 company; its CIO was listed as one of the top 100 by CIO magazine; and the company was named to the Fintech 100 list, was recognized as a top 20 company to work for by the Atlanta Journal-Constitution, and was named a 2014 InformationWeek Elite 100 Winner. For more information, please visit www.equifax.com.
The Score Complete™ credit score solution from Equifax uses the best data sources and statistical modeling techniques to give an accurate assessment of a consumer's likelihood of defaulting on payments. Score Complete was developed for credit grantors that need to determine whether or not their customers are going to meet their financial obligations. The new score also makes it easier for new Canadians, students and others who are new to credit to establish a credit history.
Equifax is a registered trademark of Equifax Canada Co. Score Complete™ is a trademark of Equifax Canada Co. used under license. © 2015, Equifax Canada Co. All rights reserved.
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