Skip to main content

The shift toward embracing analytics arrives as Canadian banks are experiencing slow loan growth because consumers are already burdened with heavy debt.Getty Images/iStockphoto

Canadians with a limited credit history have often been excluded from getting car loans and mortgages at Canada's biggest banks, but that will likely change in the new year, when lenders incorporate new technology for calculating credit scores.

Equifax Inc., a consumer credit reporting agency that operates in 24 countries, is using Canada – and its financial institutions – as the first market for the new approach to credit assessment using technology that was largely developed in Toronto and Montreal. "With new technologies, we can get a better picture of the consumer when they come through the door, and incorporate it into scores," said Chris Briggs, chief marketing officer at Equifax Canada.

The shift toward embracing analytics arrives as Canadian banks are experiencing slow loan growth because consumers are already burdened with heavy debt. Adding consumers, such as new Canadians, who have traditionally struggled to get loans could provide some much-needed growth. Many financial technology companies, or fintech, look beyond consumers' credit history to assess their ability to repay loans, making banks' traditional approaches look overly conservative.

Equifax recently partnered with one of these fintech firms. Toronto-based Borrowell Inc., an online lender, announced in June that it would provide free access to credit scores through its website.

Mr. Briggs said partnerships like this one also involve sharing information: "We work with them collaboratively, without a doubt," he said.

He added that credit bureaus today essentially use technology that is little more than digitized versions of old card catalogues containing credit histories on car loans and credit-card and bill payments, for example. Equifax's new approach would be far more complex, tapping into as many as 1,600 data sources and analyzing them. Mr. Briggs said the approach is particularly helpful when applied to consumers who lack deep credit histories, such as recent immigrants.

A new immigrant might get a prepaid phone in Canada and then graduate to a postpaid phone that comes with a monthly bill. Equifax will now have this information and be able to use it when the person applies for a loan.

"What we're trying to do is capture all of the data that comes into Canada before you even have a credit report," Mr. Briggs said.

"When we come forward and talk about some of the investments we are making, it has been very well received by the banks," Mr. Briggs said.

Report an error

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 7:00pm EDT.

SymbolName% changeLast
EFX-N
Equifax Inc
+0.84%255.07

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe