Equifax Canada is one of the country's two credit bureaus – organizations that collect data about consumer debt and rank individuals on how good a job they've done in paying off what they owe. The data help companies make decisions on granting credit, and when combined with other information can also help them with other ma rketing and management decisions.
Equifax Canada is run by Carol Gray, who earlier in her career rose up the ranks of Canadian Imperial Bank of Commerce to become its chief of small business banking. Her job gives her keen insight into one of the key public issues of the day – the worrisome indebtedness of individual Canadians.
What do your numbers show about how deeply Canadians are in debt?
Actually the pace at which consumers are taking on new debt has decreased, if we use 2009 as the bookend. Consumers are becoming much more informed and are taking action, and are not acquiring debt at the same rate as they did prior to 2009. And where they do acquire debt, it is in different forms. For example, we have seen consistent declines in credit cards, which typically have a higher cost of debt than other forms. Consumers are paying down their credit cards quite nicely, and consolidating their debt into another form such as a line of credit or home equity line of credit, typically at a reduced rate.
Are the warnings about consumer credit unnecessary then?
Credit scores went down in 2009, but in the last 18 months they have remained stable. Delinquencies are on a decline. And bankruptcies have been on a decline since 2009. I think the new norm is that consumers are not taking on new credit at the accelerated rate that they did prior to 2009. What we don't know is, are consumers' incomes rising? How secure is their employment status?
Are there other factors that have helped people take better control of their debt and finances?
Recent regulations have helped. [Low credit card] teaser rates are no longer allowed to the extent they used to be in 2009 and before. And the plain language that is in credit card contracts and other lending contracts makes it easier for consumers to understand the true cost of debt. Those legislated changes were good for everybody.
What's the best way to make sure consumers don't get a shock if interest rates go up significantly?
While the lenders certainly have a responsibility, so do consumers. There is lots of information around on what their debt-to-equity ratio should be, and how much debt they can take on. There are tools available on the Internet to help them do that. And each consumer knows better than anyone else if there is some risk to their future employment. They can evaluate their financial obligations in the event that interest rates go up. Government plays an important role overall in their policy setting, but at the end of the day if the consumer can be informed and then empowered, that is the best way to avoid problems.
Does a credit bureau have a role in helping consumers control their debt?
We do have a role on a number of fronts. First, [we help them] access their credit report to ensure that it is accurate and up-to-date. It is not until you go to apply for credit that you realize that maybe something isn't accurate or up-to-date. Consumers should take a look at it, especially if they know that there has been a recent change in their employment status or their residence.
Individuals can see their credit data for free, if they mail in a request. Why not make online access free, too?
We are considering that. To make it available online, on a free basis, is our next step.
One of the main criticisms of credit bureaus is that it can be messy for individuals to get changes made to their credit reports.
The process is not difficult. We have data on 24-million Canadians, and the number of disputes [is a very small] percentage. It is not our role to arbitrarily change information that a consumer says is reported as A and should be B. We will go back to the source, which is the lender, and put the consumer and the lender together and say, "Okay, what should it really be?" Our objective is to facilitate the process so it is as efficient and timely as possible.
Where are you seeing the most fraud in the credit markets?
Fraud is a multi-headed beast. There is no one single aspect to it. But identity theft is an increasing problem, and statistics suggest that on a per-capita basis, Canada is hit harder than other developed countries.
Why is that?
I don't know if it is just our trusting nature as a country. Our technology is not any different, but for whatever reason, we seem to get hit on more often. Often, the fraud originates from outside Canada. There are syndicated fraud rings that move from country to country with lightening speed.
What should consumers do to ensure their identities aren't stolen in credit scams?
There are a lot of obvious things, such as not sharing your mail and keeping your PIN secure. But I also subscribe to an identity-monitoring service. It is a cheap form of insurance and the peace of mind is tremendous; you are notified if anyone tries to access your credit report. If someone tries to use your identity to apply for credit, that would set off a flag and you are e-mailed immediately.
You are a runner and a painter. How do those activities affect the way you do your job?
Athletics is my outlet to manage stress. It is important for people who have a busy work life, to have an outlet. Painting has helped me think outside the box. As much as business is about controlling the unknown, art is about inviting the unknown. It helps me think in non-linear ways.
One of our growth strategies at Equifax is product innovation. We challenge each of the businesses to increase their revenues through new products, so innovation is something that we spend a lot of time thinking about and executing. It helps build a more stable book of business, a diversified revenue stream, and keeps us, more importantly, in touch with our customers' changing needs. That's when I really draw on my experience as an artist. [It helps me look at] areas that have not been considered.