How Is Equifax Canada Taking Steps Towards Financial Inclusivity Through Alternative Data?

The growing population and immigration is driving a significant jump in the share of new-to-credit consumers. In Q1 2023, 1 in 7 consumers applying for credit were new-to-credit compared to 1 in 10 during Q1 2022. With such a considerable number of consumers eager for the financial opportunities that will help them thrive, helping ensure these consumers become scorable is critically important. 

Equifax Canada is focused on providing people with opportunities to access affordable, mainstream financial services for the things they want and need in life. Financial institutions and lenders often use a person's credit history as a significant factor when evaluating their creditworthiness. Credit access is part of the larger issue of financial exclusion. Financial exclusion encompasses credit accessibility and plays a pivotal role in addressing broader economic and social exclusion challenges. Equifax Canada is actively advancing credit inclusivity through the following three initiatives.


1. Helping To Expand Access To Credit And Driving Financially Inclusive Lending


With an estimated more than 3 million Canadian people aged 18+ deemed as “credit invisible,” meaning these individuals either do not have a credit file or the credit information on file is insufficient to generate credit scores, credit bureaus need to find new ways to assess creditworthiness and expand access to credit. 

One solution that Equifax Canada provides is the use of alternative data to score credit files or applications. Score Complete assesses the delinquency risk of consumers, either at origination or in batch for account management purposes, and returns a three-digit score that rank-orders delinquency risk. Score Complete returns a score virtually every time, unless there is a problem with the input address. The score can be used as a standalone, all-in-one consumer risk score, combining comprehensive consumer credit information with a wide variety of alternative data assets, or can be combined with traditional consumer credit data for a whole picture even performance.

2. Driving Innovation That Can Increase The Visibility Of Consumers


Sue Hutchison, President of Equifax Canada, is passionate about financial inclusivity. Innovating and delivering purpose-guided solutions that increase the visibility of consumers is core to the mission of Equifax. Hutchison notes, “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.” 

Recently, Equifax has been focused on acquiring rental data. Working with rental providers that receive rental information, Equifax is beginning to model some rental information to see how it can be used as an indicator in Canada. Canadians who rent their homes are often paying more than they would pay for a mortgage, but historically this information was not available on a credit file. Adding this to the mix can paint a more accurate picture of those who don’t have data traditionally used to describe financial health, helping them have more equitable access to credit. If someone pays $1,500 a month for multiple years, those payments may help assess one’s ability to pay, payment capacity, and risk of defaults, much like credit. Rental data can aid a lender in assessing the creditworthiness of an otherwise credit-invisible consumer. 

Last year InnovationX was launched, where Equifax and its customers collaborate to solve complicated business challenges using advanced data and insights. One of its goals is to find new ways to foster financial inclusion by using predictive and differentiated data. Through continuous innovation and adaptation, Equifax hopes to provide all new-to-Canada and new-to-credit consumers with the opportunity to live their financial best. 


3. Helping New-to-Canada and New-to-Credit Consumers Live Their Financial Best


Equifax Canada aims to deliver a more robust financial picture of immigrants who are actively seeking new financial services, including credit cards, personal loans, and automotive loans. Credit invisibility affects the lives of many Canadians, including immigrants new to Canada. Recent newcomers to Canada have less access to certain credit products, which can result in less access to the housing market and long-term equity investment opportunities. Some important factors when it comes to credit invisibility for immigrants include language, income, the number of years living in Canada, and assets. 


“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. Solving problems using our data in different ways is the type of innovation that is really exciting.” Hutchison states. 


For more information on serving new-to-credit customers, visit our website.  

If you want to learn more about how alternative data can help inform lending decisions, 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.® 2023. 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. 


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