Sue Hutchison, President of Equifax Canada, recently spoke on a panel for the Elevate conference, investigating how to minimize credit barriers for Canadians and the structural roadblocks that prevent businesses from driving financial innovation. Many Canadians face financial inequality partly driven by a lack of equal access to wealth-building tools. In the Q&A below, Hutchison shares her insights on how Equifax Canada is actively working to promote increased equity and expanding access to credit.
Sue Hutchison: There are certain segments of the population that have a more difficult time getting credit than others. One segment is young Canadians. To rent an apartment or to borrow money to pay for post-secondary education, you typically need a credit score. However, accessing credit as a young person can be difficult, as they don’t have that credit history built up. Another segment is people 60-plus that haven't borrowed money in a while. If their house is paid off and they own a car, getting back into the credit market can occasionally be difficult due to a lack of recent credit history and activity.
And then there are those who are new to Canada, who typically don't have any credit history in Canada when they arrive. In the next three years, Canada will welcome 1.5 million new Canadians. I said on the panel that I think the structure we have today has served certain groups very well and will continue to predict payment capacity and the risk of default for both small businesses and for consumers. However, I think the challenge is, how we create alternative models with different kinds of data to remove the current structural roadblocks.
Sue Hutchison: We've done some recent work looking at rental data. For example, if you pay $1,500 a month in rent for 10 years, those payments aren’t considered in your credit score. Nonetheless, those payments predict your ability to pay, your capacity to pay, and your risk of defaults, much like credit. We're starting to model some rental information to see how we can use that as a predictive indicator in Canada. Equifax is working with rental providers that receive rental information, such as BorrowellⓇ. Unlike the U.S., where utility payments are used as alternate data, they are not used in Canadian credit scores, and that’s something we’re exploring as well.
We’ve also been looking at expanding our telecommunications data, whether it’s mobile phone or internet, and all of the different services the telcos provide. We don't make the lending decisions, but we work with lenders, both big and small, and there’s increased interest from them to consider different kinds of data.
Sue Hutchison: A great way is to use credit products, even if it’s in a small way. Any purchase on a student credit card or a secured credit card requires you to make a deposit upfront and then pay it off, allowing you to step into the credit market. This simple action helps build your score and in turn, creates a thicker credit file which makes it relatively easy for lenders to predict credit risk.
Sue Hutchison: Equifax engages with all parts of the credit ecosystem from the federal government to provincial to municipal governments, large companies, banks, and the big telco companies. We also interact with auto dealers, mortgage brokers, FinTechs, and industries right down to small businesses. Innovation is working with those players, large and small, to bring and receive new ideas. We recently launched InnovationX, where Equifax and its customers collaborate to solve complicated business challenges using advanced data and insights. I am passionate about how Equifax can play a role in bettering the credit ecosystems for Canadians. I think financial inclusion is crucial in a country that welcomes so many new people each year. We can provide data to solve many issues, not just access to credit, but also in fraud and identification. For example, during the pandemic’s early days, people couldn’t go into a Service Ontario office to pick up their benefits cheques in person. Equifax adapted to remotely verify that people were receiving their funds every month. Solving problems using our data in different ways is the type of innovation that is really exciting.
For more information on serving new-to-credit customers, visit our website.
We want to help Canadians live their financial best. To learn more about understanding credit scores and access to credit, please contact your Equifax Account Representative. You can also reach us directly at 1-855-233-9226 and follow us on Twitter and LinkedIn.
This article is published by Equifax Canada Co.® 2022. All rights reserved. No part of this article may be reproduced, copied, or transmitted in any form or by any means, or stored in a retrieval system of any nature, without the prior permission of Equifax Canada Co. This article is for informational purposes only and is not intended to be legal or business advice.